Hindustan Petroleum Corp. is Morgan Stanley's top preference among oil marketing companies, amid rising oil supply.
"HPCL is a levered play from rising global oil supply and benefits from improved refinery hardware," the report stated. The brokerage predicts HPCL's Ebitda to go up to $4.5 billion in fiscal 2028.
Additionally, the peak of its capital expenditure is over and HPCL is operating in a new investment cycle, the report mentioned. An investment cycle is a period where companies make capital expenditures, dispose fixed assets and modify long term investments.
The research firm expects the rating to change as the quality of the earnings refine "against a backdrop of well-supplied oil markets, which should lead to bigger discounts in crude sourcing in 2025 and also higher - 30% above mid-cycle-integrated margins".
It maintained a bullish stance on all the three major OMCs — IOLC, BPCL, and HPCL — on account of expansion in the natural gas value chain and other factors like "global tailwinds from oversupplied oil markets in 2025; gas taking market share from diesel in China; domestic tailwinds of strong fuel demand, improving FCF, and stable fuel prices —all point to the next leg of outperformance", as per the report.
The firm also predicts a 4% compound growth rate for oil consumption in India till fiscal 2028.
HPCL, IOCL, and BPCL were all trading in the red on Tuesday.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
