Shares of Indian Oil Corporation, Oil and Natural Gas Corporation, and Bharat Petroleum Corporation, were trading in the green on Tuesday after the government slashed the windfall tax on petroleum crude from ₹ 4,100 per tonne to nil per tonne, effective from Tuesday. 

Global brokerage Nomura covered oil stocks and said that marketing margins have recovered sharply from below-normative levels, due to a decline in crude oil prices and product spreads for gasoline and diesel. This will drive a major turnaround in the operating environment for oil marketing companies. 

Crude oil prices were unable to remain elevated amid concerns about global economic growth that spiked after the onset of the Russia-Ukraine War. Meanwhile, marketing margins have recovered from a negative 12.7 per litre to ₹ 3.2 per litre in Q4FY23 (January to March). 

Indian Oil Corporation Ltd (IOCL) 

IOCL’s business interest spans across the entire value chain of hydrocarbons ranging from refining, pipeline transportation and marketing to alternative energy sources and globalization of downstream operations. 

Nomura has a buy rating on the stock with a target price of ₹ 100.00. This translates to an upside of 14.94 percent as compared to its share price of ₹ 87.00 apiece on Tuesday’s closing bell. 

IOCL is a large-cap company with a market capitalization of ₹1,18,901 crores. It has an ideal return on equity of 20.46 percent and a high dividend yield of 9.98 percent. Its share price has increased by 25.98 percent in the past six months. 

Bharat Petroleum Corporation Ltd (BPCL) 

BPCL is engaged in the business of refining crude oil and the marketing of petroleum products. It offers a wide range of products like petrol, diesel, lubricants, LPG and CNG. 

Nomura has a buy rating on BPCL with a price target of ₹ 435.00. This translates to an upside of 19.83 percent as compared to its share price of ₹ 363.00 apiece. 

BPCL is a large-cap company with a market capitalization of ₹ 77,198 crores. It has an ideal return on equity of 22.15 percent and a high dividend yield of 4.48 percent. Its share price has increased by 18.94 percent in the past six months. 

Hindustan Petroleum Corporation Ltd (HPCL) 

HPCL is engaged in the business of refining crude oil and marketing petroleum products, production of hydrocarbons and ethanol.

Nomura has a buy rating on HPCL with a price target of ₹ 310.00. This translates to an upside of 18.80 percent as compared to its share price of ₹ 260.95 apiece. 

HPCL is a mid-cap company with a market capitalization of ₹ 36,826 crores. Its share price has increased by 24.20 percent in the past six months. It has a negative return on equity of 18.95 percent but a high dividend yield of 5.39 percent. 

Written by Simran Bafna 

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