Shares of India's leading oil marketing companies (OMCs) experienced a significant rally on Monday, with Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), and Indian Oil Corporation Ltd (IOC) climbing up to 6 percent. This surge was driven by two key factors: a recent hike in petrol and diesel prices and a sharp fall in global crude oil rates.
HPCL, considered the most sensitive among the three OMCs due to its higher retail marketing exposure, led the gains, soaring 5.86 percent to hit a high of Rs 412.55. BPCL shares rose 4.55 percent to Rs 309, while IOC advanced 4.15 percent to Rs 145.30.
Fuel Price Hikes Ease Marketing Loss Concerns
The latest price revision marked the fourth hike in petrol and diesel rates over the past 10 days. Petrol prices increased by Rs 2.61 per litre and diesel by Rs 2.71 per litre. In Delhi, petrol now costs Rs 102.12 per litre and diesel Rs 95.20 per litre. Mumbai saw petrol prices reach Rs 111.21 and diesel Rs 97.83. These increases are expected to alleviate concerns over marketing losses that OMCs have been facing on auto fuels.
Global Crude Oil Prices Decline Sharply
Adding to the positive sentiment, global crude oil prices fell sharply amidst hopes of a potential US-Iran deal. Brent oil futures for August delivery tanked 5.52 percent to $94.68 a barrel. Reports indicated that Iran might be ready to surrender enriched uranium as part of a US-proposed peace agreement. Israeli Prime Minister Benjamin Netanyahu also referenced discussions with former US President Trump regarding reopening the Straits of Hormuz and upcoming negotiations on Iran's nuclear program.
Analyst Insights and Market Outlook
Analysts noted that cooling crude prices are a significant positive for OMCs. Elara Capital, while suggesting a target of Rs 326 for BPCL, highlighted that the stock had underperformed the Nifty Index by 20 percent over the past three months due to concerns over crude spikes, retail margin erosion, and delayed project monetization. However, Tata Mutual Fund's “Sector Speak – Q4 FY26” report pointed out that OMC stocks are currently trading below their 20-year average P/E and P/B ratios, suggesting limited downside risk.