Shares of oil marketing companies (OMC) in trading on Monday (October 14) as global brokerage HSBC remained optimistic about the outlook of these companies amid volatile oil prices.
Crude prices today fell amid fears of inflation in China. Last trade, brent crude traded at $78 a bbl, down more than 1 percent, while WTI crude was also down more than 1 percent at around $75 a barrel.
At the time of writing this copy, shares of Indian Oil Corporation were trading more than 1 percent higher at Rs 165, while Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation were also up 1.61 percent and 1.66 percent at Rs 343.2 percent and and Rs 401.9 per share, respectively.
The brokerage mentions that the current pressure on oil prices discourages any government intervention in fuel prices. Also, the weakness in auto fuel prices is not surprising given the above-normal monsoons. The brokerage also added that the tight marketing margin removes the weakness in the marketing of GRMs.
In particular, oil prices are witnessing rising volatility amid geo-political uncertainty. There is a brokerage view that oil demand is still quiet in the country as there are heavy rains.
The weakness of petrol (MS) and diesel (HSD) is a bit of a concern, it added.
Here are the global consumer ratings of OMCs and their target price
HSBC to IOCL (CMP: 163)
Save Buy, Target 200
HSBC on Bharat Petroleum (CMP: 338)
Save Buy, Target 460
HSBC on Hindustan Petroleum (CMP: 395)
Save Buy, Target 480