Date: Wed, 26-12-18

Crude Price: $50.51

HPCL, BPCL, IOC fell more than 50% this year on rising crude which rose to $85 in Oct.

But…

Now that we have seen a drastic reversal…why hasn’t OMC’s recovered ??

The Twin Effect.

These companies lose in their GRM’s (Gross refining margins) but gain on their Balancesheet side, as Inventory gains. Hence known as a twin effect. This being a major reason for why OMC’S haven’t recovered on falling crude prices.

Our recommendation.

Although over a longer term period, and post elections & stable crude at around $50, OMC’S could give upto 50% upside in 6-8 Months.