On Monday (November 4), the Indian stock market is witnessing a big decline. Meanwhile, the shares of oil marketing companies (OMCs) are witnessing a decline. Today, OMC shares have fallen by up to 5% after Goldman Sachs issued a bearish forecast on this sector.
poor performance of companies
Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) performed below expectations in Q2FY25. Analysts at Goldman cited weak marketing and refining performance as the main reasons.
Impact on the market
At around 12:28, shares of IOC, BPCL and HPCL were trading lower by 5%, 4.19% and 3.88% on BSE.
Shares of IOC, BPCL and HPCL have gained 39%, 64% and 111% in the last one year.
Goldman Sachs note
According to a Goldman Sachs note, OMCs’ EBITDA for the July-September quarter was weaker than estimated, with IOC’s EBITDA down 21%, HPCL’s down 6% and BPCL’s down 4%.
Solid data for Indian Oil
IOC’s standalone net profit stood at Rs 180 crore, much lower than forecast.
IOC’s gross refining margin (GRM) was $4.08 a barrel, down sharply from $13.12 a year ago.
Goldman Sachs Rating
Goldman Sachs has maintained a ‘sell’ rating on IOC and set a target price at Rs 105.
‘Neutral’ rating has been given for HPCL and BPCL.
The fall in OMC stocks following Goldman Sachs’ comments has alerted investors. This contraction is a result of declining marketing and refining margins, highlighting the current financial difficulties of these companies. Investors are advised to review their investment strategies.
