Street still cautious on IOC, HPCL and BPCL amid lower crude oil prices

While lower crude oil prices are good for margins, lesser profitability on refining, policy uncertainty add to concerns

Brent crude oil prices have corrected by about 30 per cent from their peaks in early October. This, coupled with strong fuel demand in the country, remains favourable for profitability of oil marketing companies (OMCs). Demand growth of refined products had improved to 4 per cent year-on-year in October after two successive months of muted growth. A similar trend is expected in November.

However, analysts are cautious on IOC, HPCL, and BPCL on muted refining margins as well as uncertainty around government policies, which are expected to weigh on stock prices.

The Singapore benchmark gross refining margin has now declined more than