3 Oil Stocks Receive ‘Sell’ Ratings With Huge Downside of Up to 19%; Do You Hold Any?

Synopsis: Investec reiterates ‘Sell’ on HPCL, BPCL, and IOC, citing stretched valuations and margin risks, with maximum downside of 23%, while maintaining a ‘Buy’ on Reliance for refining upcycle.

This article outlines Investec’s latest view on the Indian oil sector, highlighting its ‘Sell’ ratings on major Oil Marketing Companies (HPCL, BPCL, and IOC) due to stretched valuations, range-bound stock performance, and potential margin pressures. It also emphasises Reliance Industries as the top pick, benefiting from the ongoing refining upcycle and expected earnings growth.

Brokerage’s view on OMC

Investec on Oil Marketing Companies (OMCs) sees valuations as a key concern. Despite strong Q3 earnings supported by solid core operations and government subsidy assistance, the broking believes current stock prices remain stretched and fail to reflect sustainable through-cycle earnings, warranting caution for long-term investors.

OMC stocks have largely traded in a narrow band since the November 2025 downgrade, fluctuating between -7% and +5%. This muted price action points to limited investor conviction, even amid near-term earnings strength, underscoring the market’s cautious stance on sustainable growth and valuation levels within the sector.

Macro risks persist, with Brent crude above $70 per barrel and currently at $77 per barrel. Refining margins will remain elevated, which could pressure marketing margins and weigh on future earnings. Amid these dynamics, Reliance Industries remains Investec’s top pick, retaining a ‘Buy’ rating and benefiting from the ongoing refining upcycle. Here are the stocks that were downgraded by Investec:

Bharat Petroleum Corporation Ltd

Bharat Petroleum Corporation Ltd (BPCL), headquartered in Mumbai, is a major Indian oil and gas company. It operates two large refineries, a network of over 22,000 fuel stations, and has interests in LPG, lubricants, and petrochemicals. BPCL is also investing in renewable energy and sustainability initiatives.

With the market capitalization of Rs 1.62 lakh Crore, the stock closed at Rs 374. Investec gave a “Sell” rating with Rs 330 per share, a downside of 12% from its closing price.

Hindustan Petroleum Corporation

Hindustan Petroleum Corporation Ltd is mainly engaged in the business of refining crude oil and marketing of petroleum products, production of hydrocarbons as well as providing services for management of E&P Blocks. It maintains the second largest retail network and pipeline network in India, offering products like petrol, diesel, ATF, and LPG.

With the market capitalization of Rs 90,400 Crore, the stock closed at Rs 425. Investec gave a “Sell” rating with Rs 425 per share, which is the same as the closing price, thus meeting its rating.

Indian Oil Corporation Ltd

Indian Oil Corporation Ltd is a Maharatna Company controlled by GOI,  that has business interests straddling the entire hydrocarbon value chain – from Refining, Pipeline transportation, and marketing of Petroleum products to R&D, Exploration & production, marketing of natural gas and petrochemicals.

With the market capitalization of Rs 2.53 lakh Crore, the stock closed at Rs 179. Investec gave a “Sell” rating with Rs 145 per share, a downside of 19% from its closing price.

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