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Informist, Thursday, Jan. 22, 2026

 

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--HPCL: High sales growth on retail side, not bulk side in Q3 
--CONTEXT: HPCL management's comments in post-earnings analyst call 
--HPCL: 2026 promises to be a greater year for us 
--HPCL: Mumbai refinery running at full capacity, all issues resolved
--HPCL: GRM for Mumbai refinery down by $3.5/bbl in Q3 due to disruptions 
--HPCL:See first dispatches of downstream pdts from Rajasthan refinery by Feb 
--HPCL: See FY26 capex INR 130 bln-INR 140 bln, vs budgeted INR 150 bln 
--HPCL: LPG under-recoveries in Q3 higher than INR 35/cylinder in Q2 
--HPCL: LPG under-recoveries in Q3 stood at INR 5.03 bln 
--HPCL: Do not see high capex next FY, to develop 5-year capex path in 2027 
--HPCL: See LPG under-recovery at INR 95/cylinder in Jan, INR 120 thereafter 
--HPCL: To fully operate residue upgrade unit at Vizag refinery from March 
--HPCL: Hope to finish breakwater at Chhara LNG terminal in couple of months 
 

 

By Pallavi Singhal and Sunil Raghu

 

NEW DELHI/AHMEDABAD – Hindustan Petroleum Corp. Ltd. has pegged its capital expenditure for 2025-26 (Apr-Mar) at INR 130 billion–INR 140 billion, lower than the previously budgeted INR 150 billion, as its long-drawn refinery expansion cycle ended, the company's management said in its post-earnings conference call with analysts Thursday.

 

The management said it does not foresee a high capital expenditure outlay in the next financial year either, with the bulk of spending now directed at completion of already-committed projects, including its Visakhapatnam and Barmer refineries. The company had incurred a capital expenditure of INR 61.17 billion during Apr–Sept. The management added that the company will begin working on its five-year capital expenditure plan in FY27. 

 

The company's management said "2026 promises to be a greater year for us", with commissioning and stabilisation of key refineries lined up. At the refinery in Visakhapatnam, HPCL said the LC-MAX-based residue upgradation unit--one of the most complex deep-conversion projects attempted globally--is currently in the stabilisation phase, with the company targeting performance guarantee tests and full utilisation by March. An LC-MAX-based residue upgradation unit is a cutting-edge refinery technology which uses advanced hydrocracking to convert low-value, heavy crude oil bottoms into high-value, cleaner fuels such as diesel, gasoline, achieving over 90% conversion, significantly boosting refinery efficiency, complexity, and energy security while reducing heavy residue production. 

 

Management said this quarter would largely be marked by stabilisation, with meaningful financial benefits expected to be accrued from the next financial year onwards. The company sees improved crude flexibility and deeper conversion once the unit becomes fully optimised.

 

The company added that progress was outlined at its Rajasthan refinery, where crude and natural gas are already flowing into the plant and commissioning of the crude distillation unit is underway. The management said it expects the first tranche of downstream product dispatches by February, followed by a gradual ramp-up. "Once the CDU (crude distillation unit) is done, the downstream and intermediate products will start coming out," it said, adding that the refinery is expected to ramp up and attain full capacity by the Apr-Jun quarter of the next financial year, with petrochemicals stabilisation likely by Jul-Sept quarter, given the complexity of the integrated configuration.  

 

HPCL said its Mumbai refinery has resumed operations and is running at full capacity, with all issues arising from the contaminated crude incident now resolved. The refinery had faced significant operational disruptions in late 2025 after processing a batch of crude oil from Hindustan Oil Exploration Co. Ltd.'s B-80 field that contained abnormally high levels of salt and chloride, in violation of their agreement. The contamination led to corrosion, reduced output and a temporary scale-down in production. HPCL had pursued claims against Hindustan Oil Exploration for damages, and imported fuel to meet supply commitments while working to restore normal operations.

 

However, the disruption weighed on the company's margins in the December quarter. "If that incident had not happened, the Mumbai GRM (gross refining margin) would have been higher by around $3.5 per barrel," the management said, adding that at a consolidated level, HPCL's gross refining margins would have been closer to $10.24 per barrel had the disruption not occured.

 

The company's gross refining margin rose over 47% on year to $8.85 per barrel in the December quarter from $6.01 per barrel a year ago. HPCL's gross refining margin in the nine months ended Dec. 31 rose to $6.91 per barrel from $4.73 per barrel a year ago. The management said the financial impact of the incident, however, has been largely captured in the December quarter.

 

HPCL's management said sales volumes grew around 1% on-year in the latest quarter, with growth driven primarily by the retail segment rather than bulk. It consciously chose not to chase bulk diesel volumes amid aggressive discounting in the market, instead prioritising value and margins, it added. "All our sales increases in the domestic market came on the retail side. Bulk was seeing huge discounts, and we did not chase that market," the management said, adding that HPCL did not lose retail diesel market share during the quarter despite heightened competition. As of Dec. 31, HPCL had 24,572 outlets through which it sold petrol and diesel on a retail basis.

 

The company said under-recoveries on subsidised liquefied petroleum gas increased sequentially in the December quarter, estimated at INR 5.03 billion. According to the management, the under-recovery for the September quarter was estimated at around INR 35 per cylinder, which has now increased to INR 95 per cylinder in January. It said the rise was driven by higher Saudi contract prices, adding that under-recoveries are expected to widen further in the near term and go up to INR 120 per cylinder if current price levels persist.

 

The government mandated state-owned oil marketing companies to supply LPG cylinders to a section of domestic customers at regulated prices below cost, despite high international prices. The companies bear losses from under-recoveries for extended periods until the government provides compensation.
 

Providing an update on its gas businesses, the company's management said it expects the city gas distribution business to begin making a significant contribution over the next year, as volumes scale up across its portfolio. It said most city gas distribution entities are already marginally positive, but any material impact on earnings will be visible once the networks mature.

 

HPCL said liquefied natural gas utilisation at the Chhara terminal continued to remain constrained by weather-related limitations, but an improvement is expected once the breakwater construction is completed in the next couple of months, allowing the terminal to function as an all-weather port.

 

HPCL detailed its December quarter earnings post-market hours Wednesday. The company reported a net profit of INR 40.72 billion for the quarter, up around 35% on year, but below analysts' expectations of INR 44.40 billion. Its revenue stood at INR 1.24 trillion, including excise duty of INR 94.29 billion, up 5% on year. At 1327 IST, the stock traded 1% lower at INR 425 on the National Stock Exchange.  End

 

US$1 = INR 91.61

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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