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Informist, Tuesday, Aug. 5, 2025

By Sunil Raghu

AHMEDABAD – Continued geopolitical tensions and cross-border conflicts in the June quarter kept international crude oil prices in check, which is expected to help state-owned Hindustan Petroleum Corp. Ltd. report a sharp rise in its net profit.

The company's net profit is seen surging over 13 times on year in Apr-Jun, even as revenue may decline due to lower crude oil prices, a refinery shutdown, and muted offtake.

The company's net profit for the June quarter is estimated at INR 47.4 billion, while its revenue is seen falling 13.1% on year to INR 989.1 billion, according to the average of estimates by 10 broking firms. On a trailing basis, the company's bottom line is expected to jump 41.2% while the top line is seen falling 9.7%.

The lowest projection for bottom line is by Nirmal Bang Equities Pvt. Ltd. at INR 23.3 billion and the highest is by JM Financial Institutional Securities Pvt. Ltd. at INR 60 billion. The highest projection for top line was by YES Securities (India) Ltd. at INR 1.1 trillion and the lowest was by ICICI Securities Ltd. at INR 873.3 billion.

Reports from multiple brokerages indicate that Brent crude oil prices averaged $66.8 per barrel in the June quarter, down $8.3 from Jan-Mar and $18.2 from a year ago. The sharp drop in crude prices is seen aiding the gross marketing margins for oil marketing companies on a trailing basis. At the same time, refining margins also improved. The benchmark Singapore gross refining margin rose to $5.6 per bbl, up $2.5 sequentially, supported by an uptick in cracks of key products such as gasoline, liquefied petroleum gas, gasoil and aviation turbine fuel. A product crack represents the difference between the price of a barrel of crude oil and that of a refined product. Higher cracks translate to better profitability for refiners processing crude into refined or finished fuels.

Analyst reports show HPCL's gross refining margin to be between $8.2 and $9.1 per bbl, with refining throughput at 6.6–6.8 million tonnes and marketing throughput of around 13.1–13.2 million tonnes. The state-owned oil major's blended marketing margin is estimated at INR 6.4–INR 6.6 per litre, while petrol and diesel margins are expected to rise to INR 9.5 and INR 7.3, respectively. These margins of retail fuels are expected to have doubled from the June quarter of last year and to be about 25% higher than in the March quarter. HPCL's throughput for the June quarter is seen up 14-15% on year, but lower by 2% on a trailing basis due to a shutdown at the 10-million-tonne-per-annum capacity refinery in Mumbai.

Nirmal Bang, in its report, said HPCL's gross refining margins for the June quarter will be $3.8 per bbl compared to $5 per bbl in Apr-Jun, 2024-25. It also has given the lowest net profit projection for HPCL among all analysts polled. It expects HPCL to record higher LPG and inventory losses for the June quarter. It estimates LPG loss at INR 29.8 billion compared to INR 24.4 billion a year ago and an inventory loss of INR 32.4 billion against zero loss a year ago.

The average of estimates of 10 brokerages pegs the company's earnings before interest, tax, depreciation and amortisation, or EBITDA, at INR 81.4 billion in Apr-Jun. EBITDA estimates ranged from INR 50.9 billion to INR 98.2 billion.

The analysts will watch out for management's commentary on the commissioning of the new Rajasthan refinery. HPCL has announced that it hopes to commission the new refinery by Apr-Jun of 2026. The analysts are also keen to know the status of the bottoms upgrade project by HPCL. During the refining process, crude oil is separated into fractions or products based on boiling points. The bottoms, or the residue, are generally the heavier components, be it heavy fuel oil or asphalt. These are relatively less valuable and harder to market. A bottoms upgrade project helps reduce the production of these low-value products by converting them into lighter and marketable fuels as diesel, gasoline and petrochemicals feedstock. 

HPCL will announce its quarterly earnings on Wednesday.

On Tuesday, shares of HPCL ended at INR 402.45 apiece on the National Stock Exchange, down 1.5% from the previous session. The stock has risen 1.5% since May 6, when HPCL had announced its March quarter earnings.

Following are the June quarter earnings estimates for Hindustan Petroleum Corp. Ltd., based on reports from 10 brokerage firms in descending order by the estimate of net profit:

End

US$1 = INR 87.80

Edited by Tanima Banerjee

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