HPCL Stock: Should you buy, sell or hold after their Q3 results?

SYNOPSIS: HPCL reported strong Q3 FY26 growth with higher revenues and profits, robust refining operations and expansion, while brokerages remained mixed amid margin pressures, valuation concerns and long-term earnings support outlook.

Shares of a Maharatna company owning and managing India’s largest lubricant refinery and having the 2nd-largest retail network and LPG marketing presence are in focus on Thursday, after posting Q3 FY26 results with a rise in net profit by around 4 percent QoQ and 58 percent YoY, but 

At 02:30 p.m., shares of Hindustan Petroleum Corporation Limited were trading in red at Rs. 426 on BSE, down by around 1 percent, compared to its previous closing price of Rs. 428.95, with a market cap of Rs. 90,645 crores. The stock has delivered positive returns of around 15 percent in the last one year, but has fallen by over 10 percent in the last one month.

Financial Performance for Q3 FY26

Hindustan Petroleum Corporation Limited (HPCL) announced the financial results for the third quarter of FY26 on Wednesday after market hours, as per the latest regulatory filings with the stock exchanges.

For the quarter, HPCL posted a consolidated revenue from operations of Rs. 1,15,153 crores, reflecting a sequential growth of over 14 percent QoQ compared to Rs. 1,00,856 crores in Q2 FY26. Likewise, on a year-on-year basis, revenue increased nearly 4 percent from Rs. 1,10,608 crores recorded in Q3 FY25.

Net profit for Q3 FY26 stood at Rs. 4,011 crore, indicating a marginal increase of around 4 percent QoQ from Rs. 3,859 crores in Q2 FY26, and a significant growth on a year-on-year basis by nearly 58 percent from Rs. 2,544 crores reported in Q3 FY25.

Refinery Operations, Network Expansion, Capex & More

During the quarter, HPCL commissioned the Residue Upgradation Facility (RUF) at its Visakh Refinery, Bharat’s first hydrogen-based residue hydrocracking unit, delivering around 93 percent conversion of bottom oils into high-value products.

Refinery operations recorded crude throughput of 6.38 MMT in Q3 FY26. The Visakh Refinery registered crude throughput of 4.01 MMT, operating at 106 percent of its nameplate capacity, while the Mumbai Refinery achieved throughput of 2.37 MMT, operating at 99 percent of its nameplate capacity.

Total sales volumes for Q3 FY26, including exports, stood at 13.34 MMT, reflecting a 3.7 percent YoY growth. Domestic sales increased by 3.1 percent YoY, combined sales of Petrol (MS) and Diesel (HSD) rose to 8.07 MMT, up 2.6 percent YoY, while total LPG sales (domestic and non-domestic) increased by 8.9 percent YoY to 2.52 MMT. Pipeline throughput stood at 6.24 MMT.

Capex during Q3 FY26 was Rs. 4,976 crore, taking cumulative capex for 9M FY26 to Rs. 11,094 crore. These investments were primarily focused on strengthening refining and marketing infrastructure, including investments in subsidiaries and JV companies to build additional capacities, new business lines and improving operating efficiencies.

Further, HPCL commenced an aviation refuelling facility at the Navi Mumbai International Airport, increasing the total number of Aviation Service Facilities (ASFs) to 59.

The company commissioned 321 retail outlets, taking the total network to 24,572 outlets. Five new LPG distributors were added, increasing the total to 6,389. In the CGD segment, the company laid 793 inch-km of steel pipelines (total: 14,026 inch-km) and 194 km of MDPE pipelines (total: 4,593 km), while adding 12,457 new domestic PNG connections, taking the cumulative count to 1,45,867.

Brokerages Views & More

Global brokerage Citi initiated a ‘buy’ coverage on HPCL with a target price of Rs. 595 per share, implying an upside of around 39 percent from the previous close. Citi noted that largely stable refining margins and softer marketing margins of HPCL were offset by a reduction in LPG losses, partial recognition of earlier-announced LPG compensation, and lower foreign exchange losses.

In contrast, CLSA initiated a ‘hold’ rating on the stock with a target price of Rs. 420 per share. The brokerage highlighted that while refining margins were stronger than expected, they were more than offset by a sharp shortfall in unit marketing margins, even as overall volumes remained broadly in line with estimates.

Meanwhile, Jefferies recommended a ‘sell’ rating on HPCL, assigning a target price of Rs. 385 per share, indicating a potential downside of over 10 percent from current levels. Jefferies pointed out that the company’s EBITDA was 11 percent below its expectations, primarily due to underperformance in the refining segment. However, it flagged two positives: government compensation for LPG losses is expected to support earnings through FY27, and the low crude oil price outlook for 2026 could be favourable for marketing margins.

On the downside, Jefferies cautioned that the commissioning of the Rajasthan refinery by FY27 could weigh on HPCL’s profitability. It further noted that valuations appear full and at a premium compared to Bharat Petroleum Corporation Limited (BPCL). As a result of the earnings miss and valuation concerns, Jefferies cut its FY26 profit estimate for HPCL by 3 percent.

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