Maintain ‘Buy’ on IOC, BPCL, HPCL: Emkay

MUMBAI: Shares of oil marketing companies have gained momentum since the government announced hike in fuel prices. According to Emkay Global Financial Services, the recent announcements and actions by the government to partially deregulate and hike price have shown incremental upside on earnings of OMC’s.

“Implementations of a partial de-regulation have set in motion the process of re-rating of the oil marketing companies. With policy initiative being a strong rating trigger for the OMC’s, the recent event is likely to help OMC’s regain their historic peak valuation of 1-year forward
P/BV of 2x.

We maintain buy rating on the IOCL, BPCL and HPCL with the target price of Rs 392 (1.4x FY12E BV of Rs.286), Rs 675 (1.3x FY12E BV of Rs.514) and Rs 515 (1.3x FY12E BV of Rs 442) respectively,” the report said.