Company Update : HPCL by Motilal Oswal Financial Services Ltd
Beat driven by higher-than-estimated GRM
* HPCL’s EBITDA came in at INR76.2b (29% beat), aided by higher-thanestimated reported GRM of USD8.9/bbl (48% beat).
* Marketing margin (including inv.) stood at ~INR5.8/lit (est. INR5.4/lit).
* Refining throughput was in line at 6.6mmt. Marketing volumes also came in line at 12.1mmt.
* LPG under-recovery stood at INR12.4b (down 42% QoQ).
* PAT came in 29% above our est. at INR38.3b.
* Other income, depreciation and finance costs were below our estimates. However, forex loss stood at INR7.3b.
* As of Sep’25, HPCL had a cumulative negative net buffer of INR142.4b due to the under-recovery on LPG cylinders (INR130b as of Jun’24).
* As of Sep’25, net debt stood at INR549.2b (vs. INR631.6b as of 31st Mar’25).
* The MoP&NG, through letters dated 3rd and 24th Oct’25, approved a compensation of INR79.2b to HPCL for under-recoveries on the sale of domestic LPG up to 31st Mar’25, and those expected up to 31st Mar’26. The amount will be released in 12 equal monthly instalments, with accruals recognized on a monthly basis starting Nov’25.
* The Board has declared an interim dividend of INR5/sh (FV: INR10/sh).
Press release KTAs:
* Under Project Samriddhi, the company's EBITDA enhancement initiative, accruals during 1HFY26 amounted to INR8.2b, translating into ~USD0.52/bbl.
* Refining segment:
* Refineries achieved a record crude throughput of 13.2mmt in 1HFY26, up 9.7% from 12.1mmt in 1HFY25.
* During 2QFY26, one additional crude grade was processed, bringing the total number of new grades processed in 1HFY26 to five.
* Marketing segment:
* In 2QFY26, combined petrol and diesel sales stood at 7.1mmt (up 2.8% YoY), whereas total LPG sales reached 2.4mmt (up 5.9% YoY).
* HPCL’s aviation business posted 6.1% growth QoQ vs. industry decline of 2%.
* A total of 351 retail outlets were commissioned in 2Q (total 24,252 outlets).
* 2Q capex stood at INR32.6b, bringing the total for 1HFY26 to INR61.2b.
* Update on ongoing projects:
* India’s largest LPG storage cavern, with a capacity of 80 TMT, was commissioned in Mangalore during the quarter.
* HPCL Rajasthan Refinery (HRRL) has achieved 89% overall physical progress, with the refinery section surpassing 95%. Of the 13 process units, three -- diesel hydrotreating (DHDT), hydrogen generation unit (HGU), and crude/vacuum distillation -- are currently in the pre-commissioning stage. Crude feed into the crude distillation unit (CDU) is anticipated in CY25.
* At the residue upgradation facility (RUF) in Visakhapatnam, pre-commissioning activities are progressing well. ISBL hydrogen and flare headers have been successfully commissioned. Integrity testing of the unit under high-pressure and high-temperature conditions using hydrogen has been completed, and catalyst loading is currently underway.
* Renewables: A 1.5MWp floating solar power project was successfully commissioned at Visakhapatnam.
* Retail energy transition:
* CNG infrastructure: 42 new CNG outlets commissioned, expanding the network to a total of 2,113.
* Solar adoption: 304 additional retail outlets solarized, bringing the total to 22,747, now covering 94% of the network with renewable energy.
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