Oil & Gas stocks to buy: Shares may rally 40%; OMCs cut petrol, diesel prices as global crude rates fall

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August 26, 2021 2:54 PM

Oil marketing companies (OMCs) have started cutting petrol and diesel prices as global crude oil rates softened

BPCL, GAIL, Gulf Oil Lubricants, IGL, IOCL, ONGC, Petronet LNGDemand for oil products in the first half of August 2021 has slightly recovered from the second Covid-19 wave period

Oil marketing companies (OMCs) have started cutting petrol and diesel prices as global crude oil rates softened. So far this month, petrol prices have been cut twice while diesel rates have been slashed on five instances. Last month, petrol prices were increased on nine occasions, while diesel rates were hiked 5 times. In June and May, fuel prices were raised 16 times each month. In the past month, the cumulative cut in petrol and diesel prices stood at Rs 0.4 and Rs1.0 per litre, respectively, with crude prices hovering around USD70/bbl.

Domestic research and brokerage firm Emkay Global Financial Services has given ‘buy’ rating to seven oil and gas stocks — BPCL, GAIL, Gulf Oil Lubricants, IGL, IOCL, ONGC, Petronet LNG and see up to 38 per cent rally from current levels. In a recent sector update report, the research firm noted that demand for oil products in the first half of August 2021 has slightly recovered from the second Covid-19 wave period, though petrol and diesel sales were down 4.9 per cent and 15 per cent, respectively, (due to monsoon seasonality impact as well) and LPG was down 2.7 per cent, while ATF prices was up 25 per cent, sequentially.

Sabri Hazarika, analyst at Emkay Global Financial Services, in a report, highlighted that petrol, diesel, ATF, and LPG sales volumes rose 9.4 per cent, 18.5 per cent, 48 per cent, and 6.6 per cent, respectively, on-year. As compared to the same period in calender year 2019, petrol managed to sustain at pre-Covid levels (up 3.7 per cent), pushed up by personal mobility demand (despite all-time-high prices), though diesel, ATF and LPG demand continued to lag (down 7.9 per cent, 45 per cent, 2.5 per cent).

Oil & Gas stocks to buy

BPCL: Emkay Global Financial Services see 16 per cent upside in the BPCL stock and pegged the target price at Rs 535 per share. The brokerage firm is overweight on thil oil & gas stock.

GAIL: It will take GAIL stock to rally 38 per cent from the current level of Rs 145 apiece, to hit the target price of Rs 200 per share set by the brokerage firm. Emkay Global is overweight on GAIL stock.

Gulf Oil Lubricants: Analysts at the brokerage firm see at leat 35 per cent rally in the Gulf Oil Lubricants stock price. It has pegged a target price of Rs 800, as against the current level of Rs 591 per share. The brokerage firm has ‘buy’ rating to the stock.

IGL: Indraprastha Gas Ltd may see a rise of 21 per cent from the current level of Rs 524.60 apiece. The brokerage firm has pagged a target price at Rs 635 per share, and is overweight on the stock.

IOCL: Indian Oil Corporation Ltd stock may rally 27 per cent to Rs 135 per share share, as suggested by the brokerage firm. Emkay Global Financial Services has given ‘buy’ rating to the stock.

ONGC: Emkay Global Financial Services is overwight on the ONGC stock. The stock has a target price pegged at Rs 140, a 21 per cent rally from the current levels.

Petronet LNG: Domestic research and brokerage firm has a ‘buy’ rating to the stock. It will take Petronet LNG stock to jump as much as 18 per cent from the current levels to hit the target price of Rs 270 per share, seen by the research firm.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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