Shares of oil marketing companies look attractive: Motilal Oswal

Motilal Oswal Financial Services said shares of oil marketing companies (OMCs) are attractively placed, though the industry’s marketing margins have weakened due to geopolitical headwinds, ongoing refining capacity maintenance, and elevated freight rates for product transportation.

The brokerage said HPCL, BPCL, and IOCL have declined since mid-Feb as the gross marketing margins on petrol and diesel have declined to an average of Rs 2.3 and Rs 0.2 per litre, respectively, in April from an average of Rs 8.0 and Rs 3.4 per litre in the March quarter.

“We expect marketing margins to normalise at higher levels from 2QFY25 onwards as the impact of these events subsides,” said Motilal Oswal’s analysts Abhishek Nigam and Aman Chowdhary in a client note.