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Informist, Thursday, Jul. 23, 2026

 

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--HPCL: Rajasthan refinery to ramp up to full capacity by Q3, now at 60%
--CONTEXT: Comments by HPCL's mgmt in post-earnings analyst call
--HPCL: Getting 100-150 basis points higher returns from retail outlets
--HPCL: Current debt stands at INR 720 billion
--HPCL: Coming out of crisis with focused portfolio, hunger
--HPCL: Looking at future with confidence, expect recovery in Q2
--HPCL: Crude availability not an issue, pricing uncertain
--HPCL: Buying lot of LPG cargoes from US, sourcing beyond Strait of Hormuz
--HPCL: Hardly got any crude from term-contracts in June quarter
--HPCL: Carried higher crude inventory as on Jun 30, took write-down
--HPCL: Loss of INR 510/cylinder in Apr-Jun, INR 490/cylinder in July
--HPCL: Saw LPG under-recovery of INR 60 bln in Q2
--HPCL: Saw under-recovery of INR 260 bln in Q2, INR 200 bln on retail fuels
--HPCL: Hope to stabilise Vizag refinery from September quarter
--HPCL: To depend completely on own, JV refineries from Oct-Dec
--HPCL: To spend up to INR 97 billion in capex during FY27, or less
--HPCL: Confident of attaining robust operating margin next year
--HPCL: Less dependent on LPG prices on systemic diversification in sourcing

 

By Adhithya Aji and Sunil Raghu

 

MUMBAI – State-run oil marketing company Hindustan Petroleum Corp. Ltd. rolled out a seven-pronged strategy to tackle the crisis arising in the wake of war in West Asia, which pushed the company to its highest loss in the past four years. "We are coming out of the crisis stronger with a more balanced portfolio and hungrier," Chairman and Manging Director Vikas Kaushal said at the June quarter post-earnings conference call. The management of the downstream oil company remained bullish on its future and expects to see recovery in the September quarter. The company also took a confident stance on stabilising its Visakhapatnam and newly operationalised Rajasthan refinery. 

 

As part of the recovery strategy, the company said its capital expenditure is very tightly managed and prioritised. With the current situation, its capital expenditure would be INR 970 or less for 2026-27 (Apr-Mar), it added. The management said it will control the company's interest costs by leveraging the Reserve Bank of India's external commercial borrowing window. Hindustan Petroleum Corp.'s current debt stands at INR 720 billion. 

 

The management said the company incurred an under-recovery loss of INR 260 billion for the June quarter due to higher crude oil prices. Of this, it incurred INR 200 billion as under-recovery for retail fuels and INR 60 billion for liquefied petroleum gas. "...it was a significant under-recovery for the whole quarter," a top official said. 

 

The company said it hardly received any crude oil from term contracts owing to the US-Iran war. "This time in the first quarter, we hardly got anything from our term contracts because a lot of the term contracts were sitting on the other side of State of Hormuz," the top management said. The company also said it is well covered for crude oil till August.

 

"I think crude availability is not an issue. Pricing, of course, goes up and down and is very difficult to handle given you are always buying dated rent and five-month pricing or two-month pricing," the management said. On the LPG front, Hindustan Petroleum Corp. said that it has diversified its sourcing by buying more cargos from the US. They said that the situation was very dynamic but no worries about the pricing of the LPG. The management also added that the company is less dependent on LPG prices due to systemic diversification on the commodity sourcing. For the June quarter, the company incurred a loss on LPG of INR 510 per cylinder and INR 490 per cylinder in July. For June, the loss was at INR 680 per cylinder.   

 

The oil marketing company said it carried higher crude oil inventory for the June quarter while keeping sufficient product. "So in a normal situation, I wouldn't have carried that much of crude in my tanks, which I was carrying on 30th of June, because we were apprehensive that war could go anywhere all the time," Kaushal said. The company had to incur write-downs due to this higher inventory, which was anticipated, he added.

 

The management also said it will stabilise its Visakhapatnam refinery in the September quarter and ramp up the Rajasthan refinery to full capacity by the December quarter. The utilisation of the Rajasthan refinery now stands at 60%. "On third quarter of this year, maybe October onwards, we are expecting an 80-85% utilisation run rate, and by fourth quarter, we expect it to have close to full utilization on the refinery section," the management said. 

 

For the June quarter, Hindustan Petroleum Corp. reported a net loss of INR 115.26 billion, lower than the analysts' estimate of a loss of INR 128.43 billion. The company reported net revenue from operations of INR 1.40 trillion for the June quarter, up almost 27% from INR 1.11 trillion a year ago. Analysts had expected a net revenue of INR 1.31 billion. The company's average gross refining margin in the June quarter was $23.80 per barrel, up from $3.08 per barrel in the year-ago quarter. 

 

At 1311 IST, shares of the company traded nearly 4% lower at INR 380.75 on the National Stock Exchange.  End

 

Edited by Deepshikha Bhardwaj

 

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