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HomeMarket News'Belle Epoque': Prabhudas Lilladher sees sweet spot for OMC stocks after valuation reset
Prabhudas Lilladher said the recent correction in oil marketing company stocks has created an attractive entry point, with healthy fuel marketing margins, limited risk of a sharp excise duty hike if Brent stays around $65 per barrel, and favourable valuations — especially for HPCL — supporting a constructive phase for the sector.
Prabhudas Lilladher on Tuesday (January 27) said oil marketing companies (OMCs) could be entering a “Belle Epoque” phase after their stocks corrected 3-15% over the past month on concerns around geopolitical tensions, a weakening rupee and the risk of an excise duty hike.
In its oil & gas note, the brokerage said gross marketing margins currently stand at ₹11.7 per litre for petrol and ₹6.6 per litre for diesel. It noted that if the impact of Brent crude at $65 per barrel and a ₹92/$ exchange rate is not fully reflected, margins could moderate by about ₹2-3 per litre.
Even in such a scenario, Prabhudas Lilladher said the likelihood of an excise duty hike exceeding ₹2 per litre on petrol and diesel remains low if crude prices stay around $65 per barrel.
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The brokerage said the recent correction has made valuations attractive. Hindustan Petroleum Corporation Ltd is trading at around 1x FY28 price-to-book value, which Prabhudas Lilladher believes factors in stable crude prices and an excise hike in line with expectations.
It added that while Indian Oil Corporation and Bharat Petroleum Corporation are in a high capital expenditure phase, HPCL is also positioned to benefit from a reduction in debt as key projects near completion.
Prabhudas Lilladher said that although OMC profitability has historically been volatile, current marketing margins and valuation levels point to a favourable phase, provided there are no fresh upward shocks to crude oil prices.
What is ‘Belle Epoque’
In the note, Prabhudas Lilladher used the term “Belle Epoque,” a French phrase meaning beautiful era, to describe a period marked by relative stability and favourable conditions. The brokerage used the expression to suggest that current margins, valuations and macro assumptions together could support a constructive phase for OMCs.
Also Read: HPCL shares downgraded by JPMorgan who warns of excise duty uncertainties
(Edited by : Shoma Bhattacharjee)
First Published:
Jan 27, 2026 8:59 PM
IST
