Citi bullish on OMCs after recent correction; suggests buying IOC, HPCL and BPCL for up to 45% potential gains

Global brokerage Citi has turned bullish connected lipid companies and has recommended buying downstream lipid companies connected dips. The planetary brokerage anticipates lipid selling companies, including Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL) to study a beardown December quarter, followed by an arsenic beardown March 4th earnings. 

The brokerage mentioned that each the 3 downstream lipid and state companies posted a diminution of 5-10 per cent implicit the past month. Also, these companies person underperformed their upstream counterpart ONGC by arsenic overmuch arsenic 10-15 per cent. Citing this the brokerage perceives the existent correction arsenic an charismatic buying opportunity.

Importantly, BPCL tumbled arsenic overmuch arsenic 4 per cent during the past month, portion HPCL and IOC fell 8 per cent and 6 per cent, respectively, during the aforesaid period. 

Furthermore, Citi highlights that the manufacture is being impacted by a slew of affirmative and antagonistic factors, of which precocious inventory gains arsenic good arsenic LPG compensation are listed arsenic the posiitve factors. Nonetheless, the assemblage is besides facing the interaction of little GRMs oregon gross refining margins, weaker selling margins and little discounts connected Russian crude. 

For each of the banal successful the OMC ( lipid selling companies) space, Citi suggests a bargain with a imaginable upside of up to 45 per cent.

Company           Rating             Target               Upside
IOCL                      Buy                    190                +45%
BPCL                     Buy                    390                +39%
HPCL                     Buy                    450                +22.6%