Macquarie upgrades Petronet LNG; HPCL top pick among OMCs

Shares of state-run oil marketing companies Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL) and Indian Oil Corporation Ltd. (IOCL) were trading lower on Friday, January 23.

Despite the near-term weakness, brokerage firm Macquarie remains constructive on Indian oil marketing companies, even as global macro uncertainties persist.

The foreign brokerage believes gas companies are well placed to benefit from lower natural gas prices over FY27 and FY28, supported by its bearish outlook on both crude oil and natural gas prices.

Macquarie expects Brent crude to average $61 per barrel, while spot LNG prices are seen at $9.40 per mmBtu in 2026. This softer commodity price environment underpins the brokerage's positive medium-term thesis for the sector.

Within oil marketing companies, Macquarie prefers HPCL over BPCL and IOCL. In the broader energy value chain, it favours GAIL in the midstream segment, while in downstream gas distribution, MGL is preferred over IGL.

Separately, Macquarie has upgraded Petronet LNG to 'Outperform' from 'Underperform' and raised its price target to ₹310 per share, citing improving fundamentals amid a favourable pricing outlook.

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Earlier this week, JPMorgan downgraded HPCL to 'Neutral', citing valuation constraints and near-term earnings risks.

JPMorgan cut its rating on HPCL, pointing to limited upside due to elevated balance sheet leverage and potential earnings headwinds linked to the commissioning of the new Rajasthan refinery.

The brokerage, however, maintained its 'Overweight' stance on BPCL and IOCL within the sector.

At the time of writing, HPCL shares were down 1.45% at ₹421.50, BPCL was marginally lower by 0.014% at ₹354.10, while IOCL was trading 0.75% lower at ₹157.85.