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What is the story about?
Shares of state-run oil marketing companies (OMCs) such as Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation
(BPCL) and Indian Oil Corporation (IOCL) will be in focus on Friday, May 15, after petrol and diesel prices were increased for the first time in four years.
In Delhi, petrol and diesel prices were hiked by ₹3 per litre each. Petrol prices were revised to ₹97.77 per litre from ₹94.77 earlier, while diesel prices increased to ₹90.67 per litre from ₹87.67.
Fuel prices continue to vary across states depending on local VAT rates.
Industry estimates suggest that a hike of nearly ₹10 per litre for petrol and ₹15 per litre for diesel would be required for OMCs to fully break even at current crude price levels.
CNG prices in Delhi were also increased by ₹2 per kg to ₹79.09 per kg.
Tough Q1 ahead for HPCL
During its earnings call, HPCL management indicated that the June quarter is expected to remain challenging for the sector, with the company likely to incur losses during Q1 amid elevated crude prices and geopolitical uncertainties.
Management said the company's balance sheet strength would help navigate the current environment.
HPCL also reiterated that commissioning the HRRL refinery remains a priority, following which focus will shift towards the petrochemicals project. The company added that renewables will continue to see increased focus within its broader portfolio.
HPCL stated that it currently has around two months of secured crude supply at any given point in time and remains adequately supplied till July.
While crude sourcing during normal conditions is split roughly equally between term contracts and spot purchases, the company said it has increasingly relied on spot contracts since the escalation of the West Asia crisis.
Management also said that sourcing patterns have shifted, with dependence on Persian Gulf crude reducing, while procurement of Russian crude has increased during the ongoing crisis.
On LPG, HPCL reported under-recoveries of ₹1,350 crore during the quarter and said it received government compensation of ₹3,300 crore towards LPG subsidies.
The company acknowledged ongoing losses but said it is managing the situation as efficiently as possible.
Management added that it is difficult to provide guidance in such a volatile environment, though it emphasised that crude supplies remain available through multiple sourcing avenues, including long-term agreements with African and South American suppliers.
Meanwhile, analyst sentiment on HPCL has turned increasingly cautious. Nearly one-third of the 34 analysts tracking the stock now recommend a 'Sell' rating, the highest proportion seen in the last two years and the first such instance since March 2024.
The shift follows a downgrade by Nomura, which cut HPCL's rating to 'Neutral' from 'Buy' and reduced its target price to ₹440 from ₹550 earlier. Other brokerages including CLSA, ICICI Securities and Equirus Securities have also downgraded the stock recently.
In Delhi, petrol and diesel prices were hiked by ₹3 per litre each. Petrol prices were revised to ₹97.77 per litre from ₹94.77 earlier, while diesel prices increased to ₹90.67 per litre from ₹87.67.
Fuel prices continue to vary across states depending on local VAT rates.
Industry estimates suggest that a hike of nearly ₹10 per litre for petrol and ₹15 per litre for diesel would be required for OMCs to fully break even at current crude price levels.
CNG prices in Delhi were also increased by ₹2 per kg to ₹79.09 per kg.
Tough Q1 ahead for HPCL
During its earnings call, HPCL management indicated that the June quarter is expected to remain challenging for the sector, with the company likely to incur losses during Q1 amid elevated crude prices and geopolitical uncertainties.
Management said the company's balance sheet strength would help navigate the current environment.
HPCL also reiterated that commissioning the HRRL refinery remains a priority, following which focus will shift towards the petrochemicals project. The company added that renewables will continue to see increased focus within its broader portfolio.
HPCL stated that it currently has around two months of secured crude supply at any given point in time and remains adequately supplied till July.
While crude sourcing during normal conditions is split roughly equally between term contracts and spot purchases, the company said it has increasingly relied on spot contracts since the escalation of the West Asia crisis.
Management also said that sourcing patterns have shifted, with dependence on Persian Gulf crude reducing, while procurement of Russian crude has increased during the ongoing crisis.
On LPG, HPCL reported under-recoveries of ₹1,350 crore during the quarter and said it received government compensation of ₹3,300 crore towards LPG subsidies.
The company acknowledged ongoing losses but said it is managing the situation as efficiently as possible.
Management added that it is difficult to provide guidance in such a volatile environment, though it emphasised that crude supplies remain available through multiple sourcing avenues, including long-term agreements with African and South American suppliers.
Meanwhile, analyst sentiment on HPCL has turned increasingly cautious. Nearly one-third of the 34 analysts tracking the stock now recommend a 'Sell' rating, the highest proportion seen in the last two years and the first such instance since March 2024.
The shift follows a downgrade by Nomura, which cut HPCL's rating to 'Neutral' from 'Buy' and reduced its target price to ₹440 from ₹550 earlier. Other brokerages including CLSA, ICICI Securities and Equirus Securities have also downgraded the stock recently.
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