Shares of government oil refining company Hindustan Petroleum Corporation (HPCL) are soft today. But, global brokerage firm Citi has issued a positive note on this stock. The brokerage firm said that after the September quarter results, correction has been seen in this oil marketing company (OMCs) due to non-recurring factors. After this correction, the risk-reward in the stock has now become reasonable.

Citi said that after the current correction, there is an attractive opportunity to enter the stock. HPCL's stock is down about 20% from its recent peak of ₹ 457 per share. Indian Oil has performed the worst compared to other companies in the sector. This stock is down about 30% from its recent peak of ₹ 196 per share. Reasons why Citi has a bullish view on oil marketing companies:-

 

• There is little possibility of a major reduction in fuel prices.
• Compensation to companies possible for LPG under recovery.
• Crude oil prices are in a range, there are signs of a decline.
• Gross refining margins (GRMs) may remain rangebound in the short term.

Most global analysts believe that the oil market will be oversupplied by 2025. Analysts like JPMorgan and Citi believe that Brent crude oil can trade at $60 per barrel next year. Despite the weakness in demand, OPEC+ can decide to increase supply.

On Monday itself, another global brokerage firm Goldman Sachs said that after the results, the biggest risk of decline is in the oil marketing company Indian Oil. The reason behind this is the reduction in the marketing margin of this company. Goldman Sachs showed the stock trading at a price of ₹ 105 per share with a Sell opinion on it. This means that the stock is expected to fall further from the current level. Out of the 34 analysts who have included HPCL in the coverage, 20 have a Buy opinion on the stock. 4 have Hold and 10 have Sell opinion.