Shares of BPCL have also been upgraded to “buy” from “hold” but with a marginal cut to its price target to ₹360 from ₹370 earlier.
Indian Oil’s shares have been upgraded to “neutral” from “sell” as it finds risk-reward evenly balanced. Goldman Sachs has marginally revised its price target higher to ₹110 from ₹105 earlier.Although Goldman Sachs sees earnings risks to these companies driven by lower discounts on crude oil prices and LPG Under-recoveries, it believes that all of these concerns are largely priced in.
It also said that the setup for these companies for financial year 2026 and 2027 is improving as the upside to crude oil prices remains capped.Brent prices may fall to $70 per barrel by the end of the year, according to Goldman Sachs, who sees free cash flow as a key metric for these stocks to recover in financial year 2026.
“Risk-reward implied by our valuation framework appears more attractive,” the note said.
HPCL’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to grow at a Compounded Annual Growth Rate (CAGR) of 40% over financial year 2025-2027, Goldman Sachs said, while BPCL’s free cash flow yield is likely to be at 10% in the next financial year.
Out of the 34 analysts each who have coverage on HPCL, BPCL and Indian Oil, 17 of them have a “buy” rating on IOC, 22 of them say “buy” BPCL, while 20 recommend buying HPCL.
Shares of HPCL are trading 3.6% higher on Wednesday at ₹345.75, while those of BPCL and Indian Oil are trading with gains of 3% and 2.5% respectively.
