HPCL, BPCL, IOC excellent stocks to buy if subsidy issues get cleared: Sudip Bandyopadhyay

In a chat with ET Now, Sudip Bandyopadhyay, President, Destimoney Securities Pvt. Ltd, shares his views on crude and OMCs. Excerpts:

ET Now: There is a direct correlation between crude and what oil marketing companies will report in terms of profitability. Crude has melted yet HPCL and BPCL or for that matter IOC are not going anywhere. They have seen a dream run but for the moment they are stagnating despite the big tailwind which is coming from the oil market.

Sudip Bandyopadhyay: I agree with you. These companies will definitely be one of the biggest beneficiaries of this entire downtrend in oil, crude oil prices globally and Brent crude coming down so sharply. There are other uncertainties pertaining to some of these companies particularly their subsidy burden sharing and things like that. Yes, the diesel prices have significantly increased and they are at global market levels I understand at current stage. But still there is a subsidy to be handled as far as kerosene and LPG is concerned. So I will tend to think that burden and the issue needs to be clarified before investors can start getting into it based on the simple share market forces. Still it is not a market driven economics as far as these companies are concerned to the extent of the subsidy issues. As and when that gets cleared, these are excellent companies to buy. Having said that I still think they are available at attractive valuation as we speak at today’s market.