In the past one month, market price of BPCL (up 45 per cent), IOCL (up 30 per cent) and HPCL (up 27 per cent) have outperformed the benchmark index, which added 4.5 per cent rise during the same period.
Analysts at Elara Capital believe factors, such as non- Organization of the Petroleum Exporting Countries (OPEC) oil supply growth outpacing global demand meaningfully in 2019, rising gross refining margin (GRM) on upcoming International Marine Organization (IMO) regulation, above average H1FY20 retail margin and improving domestic oil demand growth, will play in favour of OMC.
“IMO will implement a ban on marine fuels that emit high levels of sulphur oxide by January 2020. Our discussions with industry experts reveal diesel demand would rise by 1.0-2.0mmbpd, as a result. This diesel demand surge offers OMC an opportunity to improve refining margin,” the brokerage firm said in a sector update.
BPCL, meanwhile, is trading above the brokerage's target price of Rs 507 per share. The firm also maintains ‘buy’ rating on HPCL and IOC with 12 month target price of Rs 415 and Rs 182, respectively.