Holding OMC Stocks? Brokerage slash TP by up to 42% for these oil & gas shares — Check full list

Oil and gas stocks traded lower on Monday, with the Nifty Oil & Gas index falling more than 2 per cent amid weakness in oil marketing companies (OMCs) as brokerages flagged earnings risks from higher crude prices.

The Nifty Oil & Gas index was trading at 11,054.25, down 232.55 points or 2.06 per cent around 11:30 am. The index has declined 3.94 per cent in the past week, 8.53 per cent in one month and 9.63 per cent so far in 2026, reflecting sustained pressure across the sector.

OMC Stocks Among Top Losers

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Shares of major OMCs were among the worst performers. Indian Oil Corporation (IOC) fell about 5.07 per cent to Rs 148.61, Bharat Petroleum Corporation (BPCL) declined 3.77 per cent to Rs 307.25, while Hindustan Petroleum Corporation (HPCL) also remained under pressure.

The decline follows brokerage HSBC downgrading the OMC space and sharply cutting earnings estimates and valuation multiples, citing the risk of marketing losses if crude prices remain elevated.

HSBC Flags Marketing Loss Risk

HSBC said higher crude oil prices could lead to marketing losses even at $75 per barrel, which could significantly impact the earnings of downstream companies.

The brokerage downgraded HPCL, IOC and BPCL to ‘Hold’ from ‘Buy’ and reduced target prices sharply.

HSBC Cuts HPCL Target Price

For HPCL, HSBC cut the target price to Rs 360 from Rs 620, a reduction of about 41.9 per cent. Compared with the brokerage’s reference price of Rs 368, the revised target implies a downside of around 2.2 per cent.

IOC Target Reduced Sharply

For IOC, the brokerage lowered the target price to Rs 150 from Rs 220, representing a 31.8 per cent reduction. Against the latest market price of Rs 148.61, the target indicates a potential upside of about 0.9 per cent, suggesting limited near-term return potential.

BPCL Target Also Trimmed

For BPCL, HSBC reduced the target price to Rs 340 from Rs 470, a cut of around 27.6 per cent. Based on the latest traded price of Rs 307.25, the revised target implies a possible upside of about 10.7 per cent.

HSBC Maintains Reduce On ONGC

HSBC maintained a ‘Reduce’ rating on Oil and Natural Gas Corporation (ONGC) but raised the target price to Rs 240 from Rs 200. Compared with the current market price of Rs 261.35, the target suggests a downside of around 8.2 per cent.

ONGC shares were trading 1.04 per cent lower at Rs 261.35, though the stock remains up about 9.84 per cent so far in 2026, supported by stronger crude price realisations.

Macquarie Remains Positive On ONGC

Brokerage Macquarie, however, maintained a relatively positive stance on ONGC. The firm reiterated its ‘Outperform’ rating while cutting the target price slightly to Rs 300 from Rs 310.

At the current market price of around Rs 261, the Macquarie target implies a potential upside of about 14.7 per cent.

Macquarie said the current volatility in crude prices is positive for upstream producers such as ONGC. It added that sustained production growth will be critical for the company’s re-rating.

According to the brokerage, 2025 marked a year of operational stability for ONGC, with the earlier decline in production largely arrested. The firm expects a significant ramp-up in production during 2026, which could support earnings growth.

However, Macquarie cut its FY26 and FY27 earnings per share estimates by 23.8 per cent and 15.4 per cent, respectively, due to a lower-than-expected production outlook.

Despite this, the brokerage said ONGC offers an attractive dividend yield, which could support investor interest even amid volatility in crude prices.

Nomura View On Gas Utilities

Meanwhile, the gas utilities segment could see mixed impact from recent government measures related to gas allocation and supply management, according to brokerage Nomura.

Nomura said the government has defined priority segments for gas allocation, which could influence supply distribution among sectors.

In the city gas distribution (CGD) segment, the brokerage expects Mahanagar Gas (MGL) and Indraprastha Gas (IGL) to be relatively less affected by any curtailment of gas supply to industrial and commercial users.

This is because only 16 per cent of MGL’s volumes and 13 per cent of IGL’s volumes are supplied to industrial and commercial segments.

In contrast, Gujarat Gas distributes about 49 per cent of its volumes to these segments and could therefore face a larger impact if supply curtailments are implemented.

Nomura estimates that a 20 per cent curtailment to industrial and commercial segments could lead to a volume impact of around 3 per cent for MGL, 3 per cent for IGL and about 10 per cent for Gujarat Gas.

However, the brokerage cautioned that the actual impact could be higher if price-sensitive industrial consumers delay gas purchases due to elevated prices.

Impact On Refiners And GAIL

Refining companies such as Reliance Industries, IOC, BPCL and HPCL may partially switch to alternative fuels such as fuel oil if imported gas supplies are curtailed.

Nomura said fuel oil is currently cheaper than imported gas and therefore the switch may not have any significant negative earnings impact for these refiners, although there could be short-term environmental implications, especially in highly polluted regions.

In the case of GAIL (India), the brokerage expects operational impact on the company’s Pata petrochemical plant, which relies fully on gas sourced from QatarEnergy.

However, Nomura said the financial impact may be limited because the plant already operates under weak petrochemical spreads.

The brokerage added that GAIL could benefit from 100 per cent gas allocation to its LPG production plant, though the overall impact is expected to remain small as LPG production contributes only around 4 per cent of consolidated EBITDA.

Nomura noted that gas transmission and marketing businesses account for nearly 89 per cent of GAIL’s EBITDA, which means the company’s core earnings are unlikely to see a major impact.

Government Pushes Shift From LPG To PNG

Separately, pressure on LPG supply due to the ongoing conflict in West Asia has prompted the government to encourage consumers to shift to piped natural gas (PNG) where possible.

Petroleum Ministry Joint Secretary Sujata Sharma said panic booking of LPG cylinders has surged to 88.8 lakh, while supply remains under pressure due to the regional conflict.

Around 1.5 crore domestic consumers are already using PNG, and nearly 60 lakh households located near existing pipelines can shift to PNG connections.

State-run GAIL (India) has asked city gas distribution companies to quickly process requests for PNG connections for domestic as well as commercial users wherever infrastructure is available.

Officials said requests for PNG connections have increased in Delhi-NCR, Mumbai, Bengaluru and cities across Gujarat, particularly from hotels, restaurants and factories.

Market participants said the situation could create a near-term opportunity for city gas distribution companies as more consumers shift to piped gas amid uncertainty in LPG supply.