As key players in India’s petroleum industry, these two state-owned oil giants are set for significant growth in FY25. Emkay Global’s recent analysis points to promising investment prospects, with potential gains of up to 50%, despite oil price fluctuations from geopolitical issues and OPEC+ decisions. Their strong fundamentals suggest strong performance ahead.
Share Price Movement
BPCL‘s intraday high was 275.90, with a previous close of 270.20, marking a 2.11% increase and a market cap of Rs. 1,17,920 crore. HPCL reached an intraday high of 379.45, closing at 373.25, up 1.7%, with a market cap of Rs. 78,825 crore as of January 15, 2025.
Targets by Emkay Global
1. BPCL : a leading player in India’s oil and gas sector, is involved in the refining, marketing, and distribution of petroleum products. Emkay Global has set a target price of Rs. 475, offering an upside potential of 28.4% from its current market price of Rs. 370.
2. HPCL : a prominent oil and gas company in India, focused on refining, marketing, and distributing petroleum products. With a current market price of Rs. 271, Emkay Global has set a target of Rs. 475, offering an upside potential of 49.5%.
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Rationale for investment
Global oil prices have jumped up by 10% in just the last two weeks. Looking ahead, these prices might keep bouncing up and down due to world political tensions and decisions made by major oil-producing countries (OPEC+). However, experts think oil prices will likely stay between $70-80 for each barrel.
For Indian fuel companies, their profit margin on petrol has dropped from Rs 10 to Rs 8 per litre, and on diesel from Rs 6 to Rs 2.5 per litre. Despite these changes, consumers probably won’t see any changes in fuel prices at your local petrol pump anytime soon.
This situation could spell trouble for Indian oil companies profits in 2025, especially if oil stays expensive at $80 per barrel. Among these companies, BPCL appears to be in the strongest financial position. Another company, HPCL, is expected to perform better once it completes expanding its Vizag facility.
Market Outlook
The Indian oil and gas industry is on track for significant growth, with oil demand expected to double by 2045. Diesel demand will rise sharply, and natural gas consumption will grow at a 9% annual rate until 2024. India is expanding refining capacity and commercialising Strategic Petroleum Reserves (SPR) to address high oil prices.
Policies like 100% FDI in key sectors and a focus on biofuels support growth. Investment in pipeline infrastructure and biofuel blending targets further strengthen the sector’s future prospects.
Written By Fazal Ul Vahab C H
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