Oil prices rose in Tuesday’s trade, snapping a multi-session losing streak ahead of a crucial meeting of OPEC+. The rise was attributed to expectations of deeper and longer oil production cuts by OPEC+.
Global benchmark Brent crude lower 91 cents, or 1.1%, at $79.67 a barrel by 12:17 GMT. US West Texas Intermediate (WTI) crude futures lost 89 cents, or 1.2%, at $74.65. Oil prices have fallen nearly 16% in the last two months after both benchmarks hit nearly $100 a barrel levels in September.
OPEC+, the Organization of the Petroleum Exporting Countries (OPEC), and its allies including Russia, will hold an online ministerial meeting on November 30 to discuss production targets for 2024.
OPEC+ is widely expected to deepen and extend cuts to oil production amid fears of supply being consistently higher than demand.
HSBC sees an upside potential of up to 30% on these oil companies based on
● According to HSBC, oil marketing companies’ cash flows and book value increased during the first half of the 2024 fiscal year as a result of their improved performance.
● As long as the government keeps providing assistance, the brokerage anticipates that these businesses will earn respectable refining margins and possibly even free pricing.
HSBC has raised its target prices and upgraded state-controlled oil marketing companies (OMCs) from “hold” to “buy.” rating.
Indian Oil Corporation Ltd (IOCL)
HSBC has revised the target from Rs 80 to Rs 130 per share, representing a 20 percent increase from Wednesday’s 52-week high of Rs 109.50.
The company’s gross refining margins (GRM) were $18.2 per barrel, up 118 percent from the previous quarter, with a $8.6 premium per barrel. In Q2FY23, net profit was Rs 12,967 crore, compared to an adjusted net loss. Earnings for FY24e-25e were revised up from 58 percent to 122 percent
Shares gained more than 5 percent from their previous close, reaching a 52-week high of Rs 109.50. The company’s shares have increased by 23 percent in the past month, and its dividend yield is 2.83 percent.
BPCL
HSBC has revised the target from Rs 340 to Rs 555 per share, representing a 30 percent increase from Wednesday’s 52-week high of Rs 426.50.
Gross refining margins (GRM) stood at $18.5 per barrel, up 46 percent quarter on quarter, with a premium of $8.9 per barrel compared to the Singapore complex GRM. Net profit was Rs 8,501 crore, compared to an adjusted net loss in Q2FY23. FY24e-25e earnings were revised up by 76 percent to 199 percent
Shares rose over 3.7 percent from their previous close, reaching a 52-week high of Rs 426.50. The company’s shares have increased by 16.8 percent in the past month, and its dividend yield is 0.96 percent.
HPCL
HSBC has revised the target from Rs 215 to Rs 375 per share, representing a 7.5 percent increase from Wednesday’s 52-week high of Rs 348.70.
Gross refining margins (GRM) was $13.3 per barrel, up 79 percent quarter on quarter, with a premium of $3.8 per barrel. Net profit was Rs 5,118 crore, compared to an adjusted net loss in Q2FY23. FY24e-25e earnings were revised up by 40 percent to 166 percent
Shares jumped 7.7 percent from their previous close, reaching a 52-week high of Rs 348.70. The company shares have increased by 38 percent in the past month.
Shares have risen since the company increased its refinery capacity by 7 MTPA at Vizag and 9 MTPA at the Barmer refinery. The Mumbai refinery has already increased its capacity to 9.5 MTPA from 7.5 MTPA. HPCL also opened a 5 MT regasification and storage terminal in Chhara.
Written by Sriram KV
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