Nomura tags Reliance 'Buy' at Rs 1,640, sees 26% upside on refining margin tailwinds
Nomura flags structurally higher refining margins from a Hormuz blockade risk and Ukraine strikes on Russian refineries, projecting Rs 77,000 crore Ebitda impact per $10/bbl. OMCs like IOC, HPCL and BPCL and city gas distributors face margin pressure from elevated crude costs.
What happened
Nomura issues 'Buy' on Reliance Industries with Rs 1,640 target, citing structurally higher refining margins from Hormuz blockade and Ukraine strikes on Russian
Key facts
- target Rs 1,640
- 26% upside
- IOC Rs 180
- HPCL Rs 440
- BPCL Rs 365
- Rs 77,000 crore Ebitda impact per $10/bbl
Why this matters
Geopolitical supply risk is reshaping refining economics, favoring integrated players like Reliance while pressuring pure OMCs (IOC, HPCL, BPCL) and gas distributors on input costs.
What to watch
- Brent crude and Singapore GRM crack spread prints
- Escalation/de-escalation headlines around Strait of Hormuz and Russian refinery strikes
- OPEC+ output decisions and spare capacity signals
- Reliance O2C segment Ebitda in next quarterly result
- OMC marketing margin data and any government price-intervention chatter
- Reliance shares gap up on brokerage endorsement; watch for other houses (Jefferies, Morgan Stanley) to follow with target hikes
- OMC names (IOC, HPCL, BPCL) and city gas distributors (IGL, MGL) drift lower on margin-pressure narrative
- Rotation into upstream/refining beneficiaries; institutional accumulation ahead of Reliance quarterly O2C prints
- Reliance management may guide cautiously on refining sustainability to manage expectations