How are OMC stocks placed? Here are key factors at play
OMCs stocks: Crude oil prices are rising to a five-month high and the reflection of these changes may be seen on petrol/diesel prices in the near future. At the same time, OMCs remain cosant under pressure to generate profits since they have been refining along with marketing, are continuously focusing on expansion; and are giving dividends to their shareholders.
Oil marketing companies (OMCs) stocks are in focus most of the time since oil is a necessity for people from all walks of life, the global oil market is volatile, and India is highly dependent on overseas markets for crude oil. Crude oil prices are not far from a recent five-month high, a milestone whose reflection may be visible on domestic petrol and diesel prices in the near future. At the same time, OMCs remain under pressure to generate profits since they have been refining along with marketing, are continuously focusing on expansion, and are giving dividends to their shareholders.
Here are some of the key factors impacting the international crude oil market, according to Zee Business research:
Positive triggers
The average price of crude oil
March 2024: $84
February 2024: $81.6
January 2024: $79
Crude oil below $85 works favourably for OMCs
OMCs also do refining along with marketing
They benefit from products other than petrol and diesel as well
They continuously focus on expansion
OMCs have been giving dividends continuously
Negative triggers
Crude oil prices near five-month highs
OMCs' marketing margins to decline
Always uncertainty about petrol and diesel prices
Margin pressure owing to recent reduction in prices of petrol and diesel
OMC results are always volatile
How Macquarie views OMCs
Macquarie on HPCL (CMP: 446): Downgrades to 'neutral' from 'outperform'; target Rs 425
Macquarie on IOCL (CMP: 155): Downgrades to 'underperform' from 'neutral', target Rs 130
How Nomura views OMCs
Nomura on HPCL (CMP: 447): Double upgrades to 'buy' from 'neutral', target raised to Rs 570 from Rs 305.
Nomura on IOCL (CMP: 155): Double upgrades to 'buy' from 'neutral', target raised to Rs 195 from Rs 105
Nomura on BPCL (CMP: 558): Maintains 'buy', target raised to Rs 735 from Rs 455.