Stocks to buy: Foreign brokerage CLSA called stocks such as ONGC and DLF as underdogs. It also likes NTPC. On ONGC, CLSA said the upstream stock is pricing in a Brent crude price lower than the current price.
The earnings upgrades were led by Kotak Mahindra Bank (6.6 per cent), followed by Mahindra & Mahindra (M&M), Maruti Suzuki India (1.8 per cent), Eicher Motors (1.8 per cent) and Tata Steel (1.4 per cent).
MOFSL tagged HPCL and MGL as momentum plays and Petronet LNG as a value play. HPCL is preferred among OMCs for its marketing leverage and catalysts such as the planned demerger
ONGC and Oil India are among the cheapest upstream stocks worldwide, trading on estimated FY28 EV/Ebitda at just 2.9x and 3.6x, compared to the global average of 4.2x (one year forward) and 4.0x (two year forward).
IGL shares led the fall, tanking 4.11 per cent to Rs 194.80. It was followed by OMC stocks BPCL, HPCL and IOC, which declined 3.86 per cent, 2.80 per cent and 2.20 per cent, respectively.
Among railway PSUs, IRCON International was trading 1.54 per cent higher at Rs 191.20. RVNL also gained 0.4 per cent to Rs 416.70. NTPC Green Energy Ltd was flat at Rs 103. PFC added 0.84 per cent to Rs 410.
OMC stocks: JM Financial said the risk-reward for OMCs namely BPCL, HPCL and IOC is not favourable given the PSUs' aggressive capex plans and as valuations are 20-30 per cent above historical averages.
Post a 20 per cent drop in its shares in six months, a few analysts said stock valuations are inexpensive and downside looks limited on the counter. They suggested a 'Buy' on the stock.
IOCL shares have relatively underperformed HPCL and BPCL recently, but the OMC entails a higher inventory risk. BPCL is fundamentally the strongest. HPCL’s Vizag expansion and modernisation project is expected to be complete by FY25-end.
BHEL today informed exchanges that it signed a memorandum of understanding (MoU) with Oil & Natural Gas Corporation Ltd (ONGC) to explore joint projects and collaboration in the area of new and renewable energy business.
For upstream oil PSUs, in the current windfall regime, realisations are not impacted until the price of $75 a barrel. However, declines are sharp below $75 per barrel. Typically, the lower oil prices are positive for OMCs, Kotak said on September 12.





