It’s not all gas: OMCs can double your wealth in 3 years, says Deutsche Bank


It’s not all gas: OMCs can double your wealth in 3 years, says Deutsche Bank

Shares of oil marketing companies such as Bharat Petroleum Corporation (BPCL), Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation (HPCL) have potential to double investor wealth in the next three years, according to a report by Deutsche Bank.

The global brokerage believes that the ongoing reform in the sector has raised earnings of oil marketing players by more than 150 per cent since 2014, but there is still $50 billion of potential value to be unlocked. Next round of reforms in the sector should bring both over 40 per cent expansion in operating EBITDA and a significant rerating as oil marketing companies (OMCs) begin to capitalise on their networks of pipelines and retail properties.

In the past three years, shares of BPCL, HPCL and IOC have surged 186 per cent, 446 per cent and 178 per cent to Rs 636.70, Rs 518.95 and Rs 374, respectively, till March 14, 2017.

Harshad Katkar, Research Analyst, Deutsche Bank in a research note said, “A rerating of the marketing business and commissioning of refining capacity expansions could mean potential stock price appreciation of up to 117 per cent for OMCs (IOC, BPCL and HPCL) over the next three years.” Read More…

Credit By: economictimes.indiatimes.com

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