Kolkata: Global brokerage firm UBS has issued a major alert on stocks of the state-owned oil marketing companies in India. These are Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) to neutral, while maintaining a sell recommendation on Hindustan Petroleum Corporation (HPCL). Obviously, the immediate trigger for all these companies are the unpredictable prices of crude oil, thanks to the military conflict between the US and Israel on the one and Iran on the other. UBS has said war in West Asia has triggered a quick rise in crude oil prices, which can put pressure on the profits of all these companies which are dependent completely on imports.
The new target prices
Indian Oil Corporation
Market price: Rs 161.20
New Rating: Neutral
Old Rating: Buy
New target price: Rs 175
Old target price: Rs 190
Bharat Petroleum Corporation
Market price: Rs 330.05
New Rating: Neutral
Old Rating: Buy
New target price: Rs 365
Old target price: Rs 425
Hindustan Petroleum Corporation
Market price: Rs 384.65
New Rating: Sell
Old Rating: Buy
New target price: Rs 340
Old target price: Rs 540
Galloping crude oil price
UBS thinks that the rising crude oil prices will negatively impact the marketing margin of these here PSU oil marketing companies. None of these companies can no opportunity to immediately increase retail fuel prices and pass on the price rise to the end consumers. Over and above this the weakening rupee against the US dollar is adding to the concern. The rupee is now around 92 against the greenback while it was around 79 in 2022.
Cut in marketing margins
As a result of the galloping crude prices, UBS has significantly cut its marketing margin estimates for Indian oil companies for FY27 and FY28. The cut is by 43-45% for FY27 and by 22-26% in FY28. However, brokerages have raised their refining margin estimates. These are: rise of 30-48% in FY27 and of 21-39% for FY28.
The shares of the OMCs have declined sharply. On Monday, March 9, the BSE Oil and Gas Index fell by nearly 3% in intraday trading. Shares of HPCL fell by 5.01%, that of BPCL by 6.44% and that of IOC by 4.43%.
On the other hand, the price of Brent Crude Oil in the global markets rose past $100 per barrel. This happened for the first time in more than three years. The price zoomed to about $116 per barrel in the April 2026 futures contract. Data show that the price shot up from about $68 to $116 per barrel in just about one month — signaling an overwhelming rise of about 71%. UBS has raised its near-term oil price forecasts and estimates the average price to be around $72 per barrel by 2026.
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