Brokerage firm Jefferies (Jefferies) has reduced the target price of the government oil refinery companies- Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation (IOC). During the trading on 3 February in the stock market, HPCL shares fell by 7%, while BPCL and IOC shares fell to 5% and 4% respectively.
In Budget 2025, no provision has been made for the compensation of the under-circulation of oil marketing companies and this news saw the pressure of selling in the stocks of these companies. In the first 9 months of FY 2025, oil marketing companies had under-riches of Rs 30,000 crore. Jefferies has reduced the target price of BPCL from Rs 370 to Rs 330, while the target price for Indian Oil Corporation has been decided to reduce the target price from Rs 170 to Rs 150. However, the brokerage firm has retained the ‘bye’ rating for both stocks. Jefferies has given HPCL ‘underperform’ rating and for this the price target has been reduced from Rs 295 to Rs 270.
The brokerage firm has said in its note that LPG subsidy according to the budget by Sarkara means that oil marketing companies will bear about 69 % of the under-circle for FY 2025 after a gap of 9 years. The note of Jefferies states, “The move means that the government has rein in the profits of oil marketing companies, where more margins of auto fuel will partially compensate for the loss of LPG.” HPCL shares closed at Rs 324.90 on 3 February at the National Stock Exchange (NSE). In addition, the shares of BPCL and IOC closed at Rs 249.55 and 120.96 respectively, declining 2.39% and 3.56% respectively.