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Reasonably priced OMC stocks to gain as marketing margins may revive

Benign crude oil prices to improve margins; political considerations in the backdrop of forthcoming state and general elections are downside risks

Oil refineries, OMCs, oil marketing companies
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In the medium-term, however, there could be a supply overhang affecting OMCs as new refining capacities are scheduled to be commissioned, especially in China

Devangshu Datta

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Investors are showing some interest in the downstream energy cycle. Refiners and marketers, especially the public sector (PSU) oil marketing companies (OMCs) could see a revival of marketing margins. Lower crude oil and gas prices may also improve margins in industries like paints, logistics, synthetic fabrics, plastics, and fertilisers.

In the medium-term, however, there could be a supply overhang affecting OMCs as new refining capacities are scheduled to be commissioned, especially in China, and this may lead to a drop in the refining margins as capacity would be surplus to demand until and unless there’s a pick-up in global growth.

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First Published: Jun 26 2023 | 11:16 AM IST

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