Morgan Stanley lists out the next major triggers for HPCL, BPCL, IOC shares

Shares of state-run Oil Marketing Companies (OMCs) – Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL), and Indian Oil Corporation Ltd. (IOC), are trading with gains of as much as 2% on Tuesday, August 19.According to global brokerage firm Morgan Stanley, global tailwinds from an oversupplied oil market in 2025, easing inflationary pressures in China, along with domestic drivers such as strong fuel demand, improving free cash flow, and stable fuel prices, all point to the next leg of outperformance.

The foreign brokerage has identified HPCL as its key ‘Overweight’ pick as it exits its investment cycle, followed by BPCL.

Morgan Stanley said that the three OMCs delivered strong Q1FY26 performance with combined profits of $2.8 billion, operating cash flow of $2.0 billion, and a $4.4 billion reduction in net debt.
The companies posted an average return on equity (ROE) of 18%.Russian crude sourcing continues to support margins, with discounts in the range of $2-3 per barrel. BPCL expects 35% of its crude requirement this fiscal to come from Russia, while HPCL’s share stood at 13%.

For Q1FY26, BPCL reported EBITDA per barrel at $10-15, nearly twice its long-term average, driven by stronger margins. HPCL too benefited from improved cost efficiencies. However, IOC continues to lag peers on margin performance.

Competition in the industrial diesel segment has intensified, with private players offering deeper discounts and wider access to fuel infrastructure.

Meanwhile, cooking gas-related losses have been compensated at around $3 per barrel.

Shares of Indian Oil Corporation are trading 0.70% higher at ₹141.29, those of BPCL are trading 1.26% higher at ₹317.95, while those of HPCL are trading 1.67% higher at ₹393.50.