Indian Oil Corporation soars 5%; ONGC hits 4-month high; here's why

Oil & Gas stocks rally on D-Street: At 12:38 PM; BSE Oil & Gas was up 2.5 per cent, as compared to 0.42 rise in the BSE Sensex.

Share price movement of Oil & Gas companies today

 

Shares of state-owned oil & gas companies were trading higher by up to 5 per cent on the BSE in Wednesday’s intra-day trade amid heavy volumes.

 

Among individual stocks, Indian Oil Corporation (IOCL) hit a 52-week high of ₹162.15, surging 5 per cent on back of heavy volumes. The average trading volumes at the counter jumped over four-fold with a combined 39.76 million equity shares changing hands on the NSE and BSE till 12:32 PM.

 

Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) among other oil marketing companies (OMCs) were up 2 per cent each. Gail (India) rallied 4 per cent to ₹186 in intra-day trade.  ALSO READ | Buy or Sell? How to trade Reliance, ONGC, OMC shares amid Russian oil ban

 

Meanwhile, shares of Oil and Natural Gas Corporation (ONGC) hit a four-month high of ₹255.70, up 2 per cent on the back of two-fold jump in average trading volumes. Oil India also was up 2 per cent to ₹421 in intra-day trade.

 

At 12:38 PM; the BSE Oil & Gas was up 2.5 per cent, as compared to 0.42 rise in the BSE Sensex.

 

Brokerages view on IOCL, ONGC

 

IOCL consolidated revenue from operations (excl. excise duty) stood at ₹178,628 crore in Q2FY26 (up 2 per cent QoQ and a decline of 7 per cent YoY). Consolidated EBITDA/PAT stood at ₹17,600 crore/₹8,191 crore, rising 17 per cent/20.3 per cent QoQ respectively. EBITDA rose a staggering 192 per cent YoY and PAT reversed from a loss of ₹448.78 crore in the same quarter last year. Profitability was driven by lower input costs, stronger GRMs, and lower LPG losses. IOCL’s Gross Refining Margin (GRM) for the quarter came in at $10.48/barrel, up from $2.15/barrel in Q1FY26.

 

According to Nomura, IOCL’s Q2FY26 EBITDA of ₹14,600 crore was 36 per cent above the Street’s estimate, reflecting a much better refining performance. The stock has achieved the brokerage firm’s target price of ₹160 per share. 

 

Meanwhile, according to reports, Morgan Stanley has maintained an ‘Overweight’ rating with a target at ₹168 per share. The brokerage sees US sanctions on Russia as low risks and believes that earnings were supported by strong cracks and limited policy intervention with Brent between $65 and $70. 

 

On the other hand, JM Financial Institutional Securities has maintained ‘Reduce’ radint on the stock, with a target of ₹145 per share on valuation grounds as it is trading at 0.97x FY27 price-to-book ratio, as compared to last three-year average of 0.9 times, however, it’s likely to see strong earnings growth over FY27-28 due to refining capacity expansion by 18 mmtpa or 25 per cent in the next 12 months.

 

Analysts believe OMCs’ integrated refining cum marketing margin will normalise around historical levels as the government may retain the benefit of any sustained fall in crude price via excise duty hike and/or fuel price cut to pass on the benefit of lower crude price to end-consumers.

 

Meanwhile, JM Financial Institutional Equities maintain its estimate and reiterate BUY (unchanged target price of ₹285 – based on 6x FY28 PE vs. global peers trading at 8-10x) on ONGC, based on its assumption of Brent at $70/bbl vs. CMP discounting ~$60/bbl of net crude realisation; and cumulative output growth of 6 per cent over FY26-28, driven by KG DW 98/2 and WO fields.

 

Given that ONGC’s past track record on output growth and opex efficiency has not been impressive, execution of this aforementioned strategy will be key for the market to gain confidence on future earnings growth trajectory and, hence, attribute a higher multiple, the brokerage firm said.