Brokerages are taking a measured view on India’s oil marketing companies (OMCs) even as recent declines in crude oil prices have revived fuel marketing margins. While petrol and diesel spreads have climbed back above pre-conflict levels, analysts warn that near-term earnings could remain under pressure due to inventory losses and elevated LPG under-recoveries.
JP Morgan expects a mixed outlook, with first-quarter FY27 results likely to be weighed down by inventory hits, though profitability could improve from the second quarter as oil prices stabilize. Kotak Institutional Equities has maintained a ‘Neutral’ stance on the broader oil and gas sector, citing the likelihood of partial excise duty hikes and structurally higher breakeven crude levels. Both brokerages, however, see tactical opportunities in select stocks, with BPCL and IOCL emerging as preferred picks amid improving margins and a gradual recovery outlook.
Kotak on Oil, Gas & Consumable Fuels
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