Prabhudas Lilladher: OMCs Enter 'Belle Epoque' After Valuation Reset

• Prabhudas Lilladher believes Oil Marketing Companies (OMCs) are entering a 'Belle Epoque' (beautiful era) after recent stock corrections.
• OMC stocks corrected 3-15% due to geopolitical tensions, weakening rupee, and excise duty hike concerns.
• Current gross marketing margins are ₹11.7/litre for petrol and ₹6.6/litre for diesel; margins could moderate by ₹2-3/litre if Brent crude hits $65/barrel and rupee is ₹92/$.
• The brokerage expects a low likelihood of an excise duty hike exceeding ₹2/litre if crude prices remain around $65/barrel.
• Valuations are now attractive, with HPCL trading at ~1x FY28 price-to-book value, and HPCL is set to benefit from debt reduction as projects complete.

Why It Matters: Prabhudas Lilladher sees a favorable period for OMCs due to attractive valuations and stable marketing margins.