RIL, MRPL, OMCs set for fresh rally, may surge up to 27%: YES Securities

Analysts at YES Securities have recommended a 'BUY' rating on Chennai Petro, MRPL, BPCL and Reliance Industries on the back of upbeat prospects for these oil refining companies.

Shares of Indian refining companies are poised for another rally, driven by strong profits and favourable payout prospects as global refining margins surge and crude oil costs remain  low, says YES Securities in its sectoral report.  The brokerage firm is bullish on oil refiners such as Chennai Petroleum (CPCL), Mangalore Refinery (MRPL), Reliance Industries, BPCL, IOCL and HPCL. It expects these shares to rally up to 27.5 per cent from current levels.  Individually, YES Securities has a 'BUY' rating CPCL, MRPL, BPCL and Reliance Industries. Whereas, it rates HPCL as 'HOLD' and the stance on IOCL is kept at 'NEUTRAL'. 

 

  Thus far in the financial year 2025-26, shares of these companies have surged up to 50 per cent with CPCL leading the charge. That apart OMCs - HPCL, BPCL and IOCL have rallied around 25 per cent each, while Reliance has gained 21.2 per cent, and MRPL 11.3 per cent till date.  In comparison, the NSE benchmark Nifty 50 index has advanced 10.5 per cent, and the Nifty Oil & Gas index jumped 12.5 per cent in the same period. 

Here's why YES Securities is bullion on oil-related stocks

  Analysts at the brokerage firm believe that Indian refiners, who have a higher distillate slate, sourcing flexibility, and improving utilization, are primed to monetize the margin cycle.  In recent quarters, Chennai Petroleum (CPCL), Mangalore Refinery (MRPL), Reliance Industries, BPCL, IOCL and HPCL have all reported significant profit increases. Going forward analysts expect these companies to report stronger performance in H2FY26, with standalone refiners seeing the most dramatic turnarounds.  "We prefer standalone refiners such as - CPCL and MRPL over the OMCs who have been witnessing a decline in the petrol and diesel gross marketing margins on factors – an increase in refining product realization for petrol and diesel, rupee depreciation against the US dollar and unchanged fuel retail price (RSP), offset by LPG burden subsidy from the government on monthly basis starting Nov 2025", the report stated.  Among key factors, the brokerage firm highlights the on-going global refining shortage which has pushed refining margins at a 2-year high across the US, Europe and Asia coupled with crude supply glut. 

    Despite narrowing of discounts owing to the US sanctions on Russian oil, India continues to benefit from discounted rates on crude imports. While Russian crude is unlikely to disappear from the Indian market, its share is expected to moderate as trade flows adjust to the evolving regulatory landscape, the brokerage says.  Analysts, however, caution that weakness in the India Rupee against the US$ in Q3FY26 so far shall compound the cost pressures for OMCs, adding to input inflation as both crude oil and LPG are dollar denominated. It estimates a likely ₹0.5/litre impact on marketing margins for OMCs on every ₹1 decline.  The Indian Rupee has tumbled from levels of 87.3 versus the US$ in mid-August 2025 to a record low of 90.56 today.