HPCL, BPCL, IOC, may see a de-rating on fears of a more populist government, CLSA says

Given a weaker-than-expected mandate in the 2024 Lok Sabha election, fears of a more populist government have risen. CLSA believes this, along with falling margins, may drive a de-rating of public sector oil marketing companies (OMCs).

The global brokerage firm prefers Oil and Natural Gas Corporation Ltd. (ONGC) over Indian Oil Corporation Ltd. (IOCL), Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL).

Asian benchmark Singapore gross refining margin (GRM) is tracking nearly $4 per barrel lower quarter-on-quarter, while our marker indicates a steeper decline for IOC, BPCL, HPCL and RIL, CLSA noted.

GRM is what a company makes from turning every barrel of crude to fuel.

The brokerage wrote that marketing margins are also tracking much lower quarter-on-quarter, pushing integrated margins to a six-quarter low.

CLSA on June 6 listed out stocks such as Larsen and Toubro Ltd., Irb Infrastructure Developers Ltd., and NCC Ltd. among others that could benefit from the 100-day plan for Modi 3.0.

An ambitious 100-day plan for Modi 3.0 will hit the ground running with large orders, the foreign brokerage highlighted in a note.

It said that large orders the being identified to be placed across the infrastructure and defence domains.

The election outcome has turned out to be a huge political blow for Prime Minister Narendra Modi's National Democratic Alliance (NDA).

The BJP-led NDA didn't secure a landslide victory that was widely predicted by the exit polls ahead of the election results. Instead, PM Modi will enter his third term with a much-weaker mandate than initially anticipated.