Prabhudas Lilladher announced on Tuesday (January 27) that oil marketing companies (OMCs) might be entering a “Belle Epoque” phase following a 3-15% correction in their stocks over the past month. This decline has been attributed to concerns about geopolitical tensions, a depreciating rupee, and the potential for an excise duty increase.
In its oil & gas report, the brokerage indicated that gross marketing margins are currently at ₹11.7 per litre for petrol and ₹6.6 per litre for diesel. If the effects of Brent crude priced at $65 per barrel and a ₹92/$ exchange rate are not fully accounted for, margins could decrease by approximately ₹2-3 per litre.
Even under these circumstances, Prabhudas Lilladher asserted that the chances of an excise duty increase exceeding ₹2 per litre on petrol and diesel remain low, assuming crude prices hold around $65 per barrel.
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The brokerage noted that the recent downturn has rendered valuations appealing. Hindustan Petroleum Corporation Ltd is currently trading at approximately 1x FY28 price-to-book value, which Prabhudas Lilladher believes accounts for stable crude prices and an excise adjustment in accordance with expectations.
Furthermore, while Indian Oil Corporation and Bharat Petroleum Corporation are currently engaged in high capital expenditure, HPCL stands to benefit from a debt reduction as significant projects near completion.
Prabhudas Lilladher commented that, despite the historical volatility of OMC profitability, the existing marketing margins and valuation metrics indicate a promising phase, provided no major upward shifts occur in crude oil prices.
What is ‘Belle Epoque’
In the report, Prabhudas Lilladher employed the term “Belle Epoque,” a French phrase translating to beautiful era, to characterize a time defined by relative stability and favorable conditions. The brokerage used this term to imply that the current margins, valuations, and macroeconomic factors may collectively foster a positive phase for OMCs.
Also Read: HPCL shares downgraded by JPMorgan due to excise duty uncertainty
(Edited by : Shoma Bhattacharjee)
First Published: Jan 27, 2026 8:59 PM IST
