OMCs in focus, stocks rally up to 13% in 1 month; BPCL hits new high

Outlook on OMCs: Analysts at Motilal Oswal revised upwards the FY26/FY27 estimates for OMCs factoring in monthly LPG under recovery compensation over Nov'25-Oct'26 under revenue.

Share price movement of OMCs today

 

Shares of oil marketing companies (OMCs) continued their upward movement, outperforming the market. These stocks have rallied up to 28 per cent in the past one month.

 

All three listed state-owned OMCs were trading higher in the range of 1 per cent to 2 per cent on the BSE in Monday’s intra-day trade. In the past one month, Bharat Petroleum Corporation (BPCL) (up 28 per cent), Indian Oil Corporation (IOCL) (up 26 per cent) and Hindustan Petroleum Corporation (HPCL) (up 18 per cent). In comparison, the BSE Sensex was up 1 per cent and BSE Oil & Gas gained 6 per cent during the same period.

 

Among these, BPCL shares today hit a new all-time high at ₹381.60 on the BSE.

Why are OMC shares in focus?

 

Union Minister for Petroleum and Natural Gas Hardeep Singh Puri on Monday announced that India has finalised its first structured contract to source liquefied petroleum gas (LPG) from the United States, marking what he described as “a historic first” for one of the world’s fastest-growing LPG markets.

 

The state-run OMCs, including IOCL, BPCL and HPCL, have concluded a one-year agreement to import about 2.2 million tonnes per annum (MTPA) of LPG for the contract year 2026. This volume accounts for nearly 10 per cent of India’s annual LPG imports, making it the "first structured contract of US LPG for the Indian market".

 

Meanwhile, the July to September quarter (Q2FY26) results of the Oil & Gas sectors indicate a strong performance, primarily driven by OMCs. All three OMCs delivered a significant beat on EBITDA estimates, driven by a 44-66 per cent beat on GRM estimates and strong marketing margins.

 

“HPCL, BPCL, IOCL reported EBITDA 29 per cent/32 per cent/51 per cent above our estimates, while their reported profit after tax came in 29 per cent/40 per cent/146 per cent ahead of expectations,” according to Motilal Oswal Financial Services (MOFSL)

 

OMCs reported a strong beat on refining and marketing margin estimates. The MoP&NG has approved compensation of ₹14,500 crore/₹7,600 crore/₹ 7,900 crore for IOCL/BPCL/HPCL toward LPG under-recoveries. The amount will be released in 12 equal monthly installments, with accruals recognized on a monthly basis starting November 2025.  ALSO READ | Multibagger: Up 3,300% from 52-week low, stock to trade 5:1 ex-bonus Nov 18 

MOFSL have revised up its FY26/FY27 estimates for OMCs as analyst’s factor in monthly LPG under recovery compensation over Nov’25-Oct’26 under revenue. Additionally, the brokerage firm raised the MS (motor spirit) and HSD (high speed diesel) marketing margin assumptions for 2HFY26-FY28 slightly to ₹3.5/lit (from ₹3.3/lit earlier).

 

Further, the brokerage firm in the Q2FY26 review said they continue to prefer HPCL among OMCs due to the HPCL’s higher leverage towards the marketing segment, higher dividend yield as HPCL’s capex cycle is tapering off, and start-up of HPCL’s multiple mega-projects in the next 12 months, providing a push to earnings.

 

Meanwhile, BPCL is poised for a stronger FY26, driven by recovering refining margins, high marketing spreads, and easing of LPG subsidy pressure. While LPG under-recoveries remain a headwind (~₹28,000 crore burden for OMCs), BPCL’s 25 per cent share is expected to be partly offset by robust marketing margins, said analysts at Yes Securities. 

 

Refining profitability is supported by higher gasoil cracks and improved crude sourcing flexibility, with Russian discounts (down to ~$1.5/bbl) aiding costs. Near-term focus will remain on cash flows, subsidy absorption, and throughput stability, the brokerage firm said with a ‘BUY’ rating on BPCL and target price of ₹415 per share.