Stocks To Buy: HPCL, BPCL Among ICICI Securities' Preferred Picks In OMCs On Attractive Valuations

ICICI Securities Report

Stocks to Buy: We remain positive, with HPCL/BPCL/IOCL as the preferred pecking order.

H1 FY25 results for the three oil marketing companies – IOCL, BPCL and HPCL – were less than stellar with accumulated LPG losses, weaker GRMs and inventory losses dragging down earnings sharply versus H1 FY24’s high base.

However, we see brighter prospects ahead for the three names over the next 12–18 months. With crude price prospects increasingly looking bearish, without necessarily dragging down product margins, and the relatively lower volatility in prices ensuring lower inventory impact, we see H2 FY25 earnings on a potentially stronger path.

We also believe the probability of atleast partial LPG compensation coming through by end-FY25E is reasonably high, given previous years’ trends.

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