Oil marketing companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are in brokerages radar after they reported robust results for the third quarter ended December 2015.
Macquarie has upgraded the Indian oil retail sector to “outperform” from “neutral”. Domestic brokerage firm Prabhudas Lilladher maintained ‘buy’ rating on BPCL and HPCL shares post their Q3 numbers.
At 11.01 am, shares of IOC were trading up by 0.45 per cent, however, BPCL and HPCL shares were trading down by 1.87 per cent and 2.76 per cent, respectively.
IOC reported 215.93 per cent rise in net profit figures for the quarter ended December 2015. The company reported net profit of Rs 3,056.86 crore in October-December 2015 period against net loss of Rs 2,636.80 crore in the same quarter last year.
HPCL reported Rs 1,042.26 crore net profit in the quarter ended December 2015 against net loss of Rs 325.38 crore in the same quarter last year.
BPCL posted 170 per cent rise in its net profit figures to Rs 1,488.60 crore for the quarter ended December 2015 against Rs 551.16 crore in the same quarter last year.
“We remain positive on oil marketing companies due to firm refining margins, no inventory loss, given stable crude oil prices and healthy marketing profits. BPCL and HPCL earnings are expected to grow at 17 per cent and 35 per cent CAGR FY15‐18E,” Prabhudas Lilladher said in a research note.
Macquarie revised target price of HPCL to Rs 915 from Rs 870 earlier, IOC target price to Rs 460 from Rs 415, however, it kept BPCL target price unchanged.
According to Prabhudas Lilladher, shares of HPCL and BPCL can hit Rs 1,047 and Rs 1,049 in the next few quarters.
On a year-to-date basis, share price of BPCL, HPCL and IOC tanked 12.68 per cent, 14.48 per cent and 10.22 per cent till February 15 where as the benchmark index BSE Sensex slid 10 per cent during the same period.
(With agency inputs)