Indian Oil Stocks Surge Up To 5%, Driven by Strong Volumes and Brokerage Upgrades

Shares of state-owned oil and gas companies experienced a significant upswing on Wednesday, with gains of up to 5 percent on the BSE, accompanied by substantial trading volumes.

Indian Oil Corporation (IOCL) reached a 52-week high of ₹162.15, surging 5 percent on exceptionally heavy volumes, which more than quadrupled the average. Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), along with other Oil Marketing Companies (OMCs), saw gains of 2 percent each. Gail (India) rallied 4 percent to ₹186 during intra-day trade.

Oil and Natural Gas Corporation (ONGC) touched a four-month high, rising 2 percent, also on increased trading volumes. Oil India also registered a 2 percent increase.

The BSE Oil & Gas index was up 2.5 percent, outperforming the broader BSE Sensex.

Brokerage views provided further support. Nomura noted that IOCL's Q2FY26 EBITDA exceeded estimates, driven by better refining performance, and achieved its target price. Morgan Stanley maintained an 'Overweight' rating on IOCL, citing strong cracks and limited policy intervention. However, JM Financial Institutional Securities maintained a 'Reduce' rating on valuation concerns, despite expected strong earnings growth from IOCL's refining expansion.

Analysts caution that integrated refining and marketing margins for OMCs might normalize as governments could adjust excise duties or fuel prices to reflect crude oil price changes.

JM Financial Institutional Equities reiterated a BUY rating on ONGC, projecting earnings growth based on field development and crude oil price assumptions, though they highlighted ONGC's past execution challenges.

Impact This news has a positive impact on the Indian oil and gas sector, reflecting improved profitability, operational efficiencies, and favorable market conditions. Brokerage recommendations suggest continued investor interest, though some valuation concerns exist. The sector's performance is also linked to broader economic and geopolitical factors influencing crude oil prices. Rating: 7/10

Difficult Terms Explained: OMCs (Oil Marketing Companies): Companies involved in refining crude oil and selling petroleum products like petrol, diesel, and LPG. Examples include IOCL, BPCL, and HPCL. GRM (Gross Refining Margin): The profit a refinery makes on each barrel of crude oil processed. It's the difference between the value of refined products and the cost of crude oil. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operational profitability before accounting for financing, taxes, and non-cash expenses. PAT (Profit After Tax): The company's net profit after all expenses, including taxes, have been deducted. QoQ (Quarter-on-Quarter): A comparison of financial results from one quarter to the next consecutive quarter. YoY (Year-on-Year): A comparison of financial results from a period to the same period in the previous year. FY (Fiscal Year): The annual accounting period used by companies and governments. In India, it typically runs from April 1 to March 31. Brent: A globally recognized benchmark grade of crude oil used for pricing international oil markets. PE ratio (Price-to-Earnings ratio): A stock valuation metric that compares a company's current share price to its earnings per share. Valuation: The process of determining the economic worth of a business or asset. Excise duty: A tax imposed on the production or sale of specific goods within a country. MMTPA (Million Metric Tons Per Annum): A unit of measurement for industrial capacity, often used for refineries or mining operations.