Brokerage firm Goldman Sachs has expressed a boom on shares of government oil companies. These companies include Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Limited (IOC). Brokerage today upgraded these stocks on 5 February. HPCL shares saw a rise of 2.95 per cent today and has closed at Rs 343.70. Apart from this, BPCL shares rose by 2 per cent to Rs 261.25 and IOC shares have increased by 1.61 per cent to Rs 126.50.
Brokerage increased target price
Goldman Sachs has upgraded HPCL to “Buy” to its previous rating “Hold”. At the same time, brokerage has increased its target price from the earlier ₹ 370 to ₹ 400.
BPCL shares have also been upgraded to “Hold” to “Buy”. However, its target price has been reduced to ₹ 360 from the earlier ₹ 370 to ₹ 360.
Talking about Indian Oil, Brokerage has upgraded it to “Sell” to “Neutral”. Goldman Sachs has increased its target price from the earlier ₹ 105 to ₹ 110.
Brokerage opinion on HPCL, BPCL, IOC
Goldman Sachs believes that there is a low discount on crude oil prices and LPG under-rikor due to the earning risk for these companies. However, Brokerage said that the market has already adjusted stock prices keeping all these concerns in mind. He also said that the setup for these companies for the financial years 2026 and 2027 is getting better as the rise in crude oil prices is limited.
According to Goldman Sachs, Brent crude prices may fall to $ 70 per barrel by the end of the year. In addition, free cash flow will be the most important for companies. If they have good free cash flow, they can perform better in the financial year 2026 and can improve the price of their shares. The note stated, “The ratio of the risk-reliefs shown by our valuation framework seems more attractive.”
Goldman Sachs said that in the financial year 2025-2027, the Ebitda of HPCL will grow from 40% CAGR, while BPCL’s free cash flow yield is likely to be 10% in the next financial year. Of the 34 analysts coverage on HPCL, BPCL and Indian Oil, 17 have rated “Buy” on IOC, 22 of them called BPCL “BUY”, while 20 advised to buy HPCL.
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