Brokerage firm Macquarie is largely cautious on oil and gas companies as it sees a moderation in their margins ahead.

Brokerage Views: The research firm remained circumspect on the sector as it sees refining and marketing margin moderation for oil marketing companies (OMC) and volume growth. It also expects margin moderation for city gas distribution companies as they expand into new midstream segments, which refers to transportation, storage and distribution. 

According to Macquarie, the current stock prices reflect a shared optimism on the inclusion of natural gas under the goods and services tax regime. While it is positive, the research firm does not see immediate benefit flowing from the move.

Top Picks: Macquarie upgraded HPCL to "outperform" from "neutral" while slashing the target price to ₹380 from ₹425. For BPCL, it maintained a "neutral" call and cut its target price to ₹315 from ₹515. The brokerage said the changes for BPCL and HPCL reflect the impact of their bonus issues. 

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In June, HPCL issued a bonus share for every two shares in the company while BPCL issued one share for every one held. 

For other gas companies, the research firm either maintained or upgraded to “neutral” calls or downgraded the stocks.

Indian Oil: Upgraded to "neutral" and increased target price to ₹155.

GAIL: Downgraded to "underperform" and hiked target price to ₹180.

Petronet LNG: Downgraded to "underperform" and raised target price to ₹260.

Mahanagar Gas: Downgraded to "underperform" and increased target price to ₹1,360. 

Gujarat State Petroleum: Maintained "neutral" and slashed target price to ₹335.

Gujarat Gas: Maintained "underperform" and cut target price to ₹450.

Indraprastha Gas: Maintained "neutral" and hiked target price to ₹480.

ONGC: Maintained "neutral" and raised target price to ₹250. 

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