ONGC, Oil India rally up to 4%; BPCL, HPCL, IOCL fall 3%; here's why

The prospects for OIL and ONGC may improve - with volume growth, stronger gas realisations and delta from refining/downstream subsidiaries likely aiding consolidated earnings momentum, say analysts.

ONGC, Oil India shares today

 

Shares of state-owned upstream companies Oil and Natural Gas Corporation (ONGC) and Oil India rallied up to 4 per cent on the BSE in Thursday’s intra-day trade in an otherwise tepid market.

 

Oil India surged 4 per cent to ₹470, while ONGC gained 3 per cent at ₹272 in intra-day trade. However, state-owned oil marketing companies (OMCs), Bharat Petroleum Corporation (BPCL) (₹370.85), Hindustan Petroleum Corporation (HPCL) (₹444.30) and Indian Oil Corporation (IOCL) (₹175.30) were down up to 3 per cent in intra-day trade. In comparison, the BSE Sensex was down 0.46 per cent at 83,348 at 11:19 AM.  CATCH STOCK MARKET UPDATES TODAY LIVE

 

Choice Institutional Equities view on Crude Oil

 

Brent price closed above $70/bl as geopolitical tensions intensified. Iranian forces conducted military drills in the Strait of Hormuz, the US deployed a second aircraft carrier to the region, while negotiators from Washington and Tehran are set to meet again in two weeks to work toward finalizing a deal. Russia’s share in overall oil import by India shrank to 21.1 per cent, lowest since October 2022. Middle East accounted for 55 per cent while Latin America accounted for 10 per cent. 

According to Choice Institutional Equities, oil markets continue to bake in about $6-8/b of geopolitical risk premium in the current prices. If tensions de-escalate or diplomatic progress occurs, the risk premium could unwind, pulling prices down. However, an escalation may lead to further spikes in oil prices from the current levels. For prices to stay elevated, there needs to be a permanent disruption to supply, which is not yet the case, the brokerage firm said. 

The length of discussions between Russia and Ukraine has so far resulted in 140 million barrels of Russian crude at sea. This will continue to increase till the time negotiations continue and might only result in a sharper fall in oil prices provided there is a peace deal. 

Overall, analysts at the broking firm continue to expect Brent to average at $61.5/b in 2026 in the backdrop of increased competition as a result of relentless supply of oil from the US, gradual unwinding of cuts by OPEC+ and possible removal of sanctions.  ALSO READ | F&B players to sustain outperformance; Britannia, Marico top picks: JM Fin

Brokerages view on ONGC, Oil India

The prospects for both the companies (Oil India and ONGC) may improve – with volume growth, stronger gas realisations and delta from refining/downstream subsidiaries likely aiding their consolidated earnings momentum over FY26–28E, even as crude realisations take a hit due to moderation in Brent.  Analysts at ICICI Securities downgraded Oil India to ADD (from Buy) due to fair valuations and some delays in supporting infra execution for gas while ONGC’s BUY rating sees higher conviction, owing to attractive valuations and better visibility of production growth. 

Meanwhile, according to analysts at Elara Capital, Oil India is transitioning from a pure upstream play to a more integrated upstream and refining firm, with rising downstream refining capacity at Numaligarh Refinery (NRL) to act as upstream earnings stabilizer. The key re-rating trigger is the NRL refinery ramp up in FY27 and FY28, that would also offer 20 per cent gas production growth visibility, while near-term performance remains oil-price sensitive. 

The brokerage firm retains BUY rating on Oil India stock with a target price of ₹575 per share, led by improving earnings mix with NRL expansion and gas production growth. Withdrawal of Mozambique LNG (from force majeure) and Andaman exploration remain longer-term optionalities. 

Meanwhile, OMCs reported EBITDA/PAT of ₹39,500 crore/₹23,740 crore for December 2025 quarter (Q3FY26) – up 91 per cent/2.4x YoY (+13 per cent/17 per cent QoQ). Lower LPG under-recovery of ₹1,940 crore for the quarter (Q3FY25 loss was ₹11,670 crore) and higher GRMs drove the YoY momentum. Q4 prospects appear strong, with healthy GRMs and stronger fuel retail margins supporting earnings.  Analysts at ICICI Securities expect sustained EPS uptick over FY26–28E, which coupled with attractive valuations and reducing leverage, underpins strong positive stance on OMCs.  =========================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.