1 day ago
Morgan Stanley Sees Three-Year Upswing for Indian Refiners
Morgan Stanley thinks Indian fuel companies may have a few strong years ahead.
It expects the money they make from refining fuel to improve.
It also says the amount of fuel stored around the world is low and demand is holding up.
India is adding refining capacity in 2026–27, with much of the new output expected to be diesel and jet fuel.
The bank thinks those products are in especially tight supply.
It sees a possible three-year period of stronger refining conditions.
Morgan Stanley prefers Hindustan Petroleum and Bharat Petroleum, and also rates Indian Oil positively.
But government limits on fuel prices, lost customers or project delays could hurt the companies.
Morgan Stanley expects a supportive earnings environment for Indian fuel retailers as refining and marketing margins improve.
The bank forecasts a three-year refining upcycle, citing tight global fuel inventories, resilient demand and limited capacity additions.
It says nearly half of incremental Indian refining output in 2026–27 is expected to be diesel and jet fuel.
Morgan Stanley prefers Hindustan Petroleum and Bharat Petroleum, while also rating Indian Oil Overweight.
The brokerage identifies risks including government fuel-price controls, market-share losses and delays to refinery projects.
- Who
- Morgan Stanley and Indian fuel retailers, including Bharat Petroleum, Hindustan Petroleum and Indian Oil.
- What
- Morgan Stanley forecasts a supportive earnings environment and a three-year refining upcycle for Indian refiners.
- Where
- India, within the global fuel and refining market.
- When
- The outlook covers an expected three-year upcycle and refers to refining capacity additions in 2026–27.
- Why
- The bank cites improving refining and marketing margins, tight global fuel inventories, resilient demand and a product mix weighted toward diesel and jet fuel.
Key facts
- Forecast upcycle
- Morgan Stanley sees a three-year runway for the refining upcycle.
- Inventory outlook
- The report says global fuel inventories are near their 2022 lows.
- Capacity additions
- India is expected to add significant refining capacity in 2026–27.
- New output mix
- Nearly half of incremental output is expected to be weighted toward diesel and jet fuel.
- Preferred stocks
- Morgan Stanley prefers Hindustan Petroleum and Bharat Petroleum.
- Coverage ratings
- The report lists Bharat Petroleum, Hindustan Petroleum and Indian Oil as Overweight.
- Reported price changes
- The article says private fuel retailers raised fuel prices by 4–5% during the week covered by the update.
Quotes
Morgan Stanley analysts
Analysts covering Indian refiners
“We expect integrated margins to remain positive this quarter even after factoring in cooking gas-related losses in Sept-26. Current margin trends continue to improve, with Dubai crude remaining below EBITDA breakeven levels at around $90/bbl. Private fuel retailers raised fuel prices by 4-5% last week and we have seen a rise in prices across CNG, natural gas and even commercial LPG.”
financialexpress.com
“Indian refiners are among the few globally adding significant refining capacity in 2026-27, with nearly half of incremental output skewed toward diesel and jet fuel, the tightest segments of the barrel. We see a three-year runway for the refining upcycle, with Indian refiners also benefiting from flexibility, and higher conversion yields.”
financialexpress.com
Sources
Related news
Morgan Stanley Sees Energy Upside, Highlights Three Market Surprises
State-run oil firms poised for sharp second-quarter profit rebound
Crude Surges Above $100, Putting Five Sectors Under Pressure
Nuvama Sees 45% Reliance Upside From Refining Strength
Indian Oil Firms Face ₹530-Crore Daily Losses as Crude Surges
Indian Oil, HPCL, BPCL Rise as Brent Crude Falls
U.S. Trade Deficit Widens as Data-Center Imports Surge
Morgan Stanley Sees Sensex Reaching 89,000 by June 2027
Analysts See AI Upside but Cautious Outlook for Indian IT
Titan Shares Fall After Q2 Sales Miss; Analysts See Opportunity
