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Informist, Monday, Jan. 19, 2026

By Pallavi Singhal

NEW DELHI – Higher refining margins due to lower crude oil prices and better profits from diesel sales are expected to drive a sharp year-on-year rise in Hindustan Petroleum Corp. Ltd.'s net profit for the December quarter, according to brokerages. Government compensation receipts are also expected to support earnings and likely to offset negligible losses on liquefied petroleum gas sales.

The oil marketing company's standalone net profit is expected to rise to INR 44.40 billion for the December quarter, up nearly 47% on year, according to an average of estimates from 10 brokerages. This also represents a near 16% sequential rise. The company's revenue for the reporting quarter is estimated at INR 1.05 trillion, marking an above 5% on-year decline. However, this is a nearly 4% sequential rise in the net sales.

The highest estimate for Hindustan Petroleum's December quarter net profit, at about INR 60.4 billion by Elara Securities (India) Pvt. Ltd., factors in stronger refining margins, full benefit of liquefied petroleum gas compensation, and limited impact from inventory and foreign exchange losses. The lowest estimate, at around INR 38.1 billion by Emkay Global Financial Services Ltd., assumes a more conservative view on refining margin expansion and a higher drag from inventory and forex losses. For revenue, estimates range from about INR 856 billion by ICICI Securities Ltd. to nearly INR 1.30 trillion by Prabhudas Lilladher Pvt. Ltd.

The expected improvement in profitability is largely driven by stronger refining margins during the quarter. Refining margins represent the gap between cost of crude oil and selling prices of refined products such as diesel, petrol, and aviation fuel. These margins tend to improve when crude prices fall faster than product prices. During the December quarter, softer crude prices, coupled with firm diesel prices, are expected to have lifted HPCL's refining profitability, as diesel accounts for a large share of the company's product mix and earnings. Although prices of petrol and diesel are officially not regulated by the government, oil marketing companies do not adjust retail prices freely in line with market movements. As a result, retail prices remain largely unchanged in practice, and fluctuations in crude prices become the main factor influencing margins.

Against this backdrop, the fall in crude oil prices, coupled with elevated diesel cracks, is expected to significantly lift HPCL's gross refining margin. A product crack represents the difference between the price of a barrel of crude oil and that of a refined product. Higher cracks translate into better profitability for refiners.

International Brent crude oil price averaged $63.1 per barrel during the December quarter, down nearly 15% on year from about $74.0 per barrel in the year-ago quarter, as global supply outpaced demand, according to YES Securities. The benchmark Singapore gross refining margin rose about 21% on year in the December quarter, led by stronger global product cracks, brokerage Nuvama said in a report. Dolat Capital estimates the company's gross refining margins at $11.6 per barrel for the December quarter, almost double of the $6.0 per barrel margin in the year-ago quarter and up sharply from the $8.8 per barrel margin in the September quarter. 

The refining margins have improved despite a moderation in throughput. The company's refinery throughput is expected at 6.3 million tonnes in the December quarter, down about 2% on year and also about 3% sequentially due to maintenance shutdowns, according to Nuvama. In contrast, the company's marketing sales volumes are expected to have risen in the quarter, with oil product sales estimated at about 13.4 million tonnes, supported by stable domestic fuel demand, Motilal Oswal Financial Services said.

Marketing margins are expected to contract sequentially, with auto fuel gross margins seen at about INR 6 per litre in the December quarter, Motilal Oswal said, versus INR 9–13 per litre a year ago, according to brokerages.

The absence of any significant under-recovery on sales of liquefied petroleum gas will also be a key earnings driver in the reporting quarter. Brokerages expect little to no losses in the liquefied petroleum gas segment, aided by higher cylinder prices, lower propane costs, and liquefied petroleum gas compensation of about INR 50 billion for past under-recoveries, which is expected to cushion profitability in the segment. Motilal Oswal estimates HPCL will receive around INR 6.6 billion per month in liquefied petroleum gas compensation between November 2025 and October 2026, which will boost earnings.

Brokerages expect earnings gains to be partly offset by inventory and foreign exchange losses. Dolat Capital estimates crude inventory losses of about $0.8 per barrel, while YES Securities expects foreign exchange losses of about INR 5.65 billion due to rupee's depreciation, with the impact likely to be higher for HPCL than for some peers.

The average of estimates pegs the company's earnings before interest, tax, depreciation, and amortisation at INR 78 billion in the December quarter. Estimates for the EBITDA range from INR 69.4 billion to INR 101.5 billion.

Hindustan Petroleum is a public-sector company that refines crude oil into petroleum products such as petrol, diesel, LPG, and lubricants and markets and sells these products. The company operates refineries in Mumbai and Visakhapatnam. It has a market share of more than 25% in India's retail fuel sales.

Shares of Hindustan Petroleum closed at INR 453.20, down 1% on the National Stock Exchange on Monday. The shares have fallen over 3.5% since the company released its September quarter earnings on Oct. 29. The company's December quarter earnings are due Wednesday.

Of the 10 brokerage reports on the company available with Informist, seven have a ‘buy' or equivalent recommendation at an average target price of INR 562. This is 24% higher than the current market price. One brokerage has a ‘hold' rating, and two have a ‘sell' rating on the stock.

Following are the Oct-Dec earnings estimates for Hindustan Petroleum Corp. Ltd. from 10 brokerages in descending order of the estimate of net profit in INR billion:

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US$1 = INR 90.91

Edited by Vandana Hingorani

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