HPCL, BPCL and Indian Oil shares fall up to 3% today after fuel price hike, weak margin concerns persist

Shares of state-run oil marketing companies including Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Indian Oil Corporation traded up to 3% lower during Friday’s session after petrol and diesel prices were increased for the first time in four years amid elevated crude oil prices and geopolitical tensions.

In Delhi, petrol and diesel prices were increased by Rs 3 per litre each. Petrol prices rose to Rs 97.77 per litre from Rs 94.77 earlier, while diesel prices increased to Rs 90.67 per litre from Rs 87.67. CNG prices in Delhi were also hiked by Rs 2 per kg to Rs 79.09 per kg.

Despite the fuel price increase, industry estimates suggest OMCs may still require a significantly larger increase to fully offset current crude costs. Estimates indicate that petrol prices may need to rise by nearly Rs 10 per litre and diesel by Rs 15 per litre for companies to break even at prevailing crude price levels.

Investor sentiment also remained weak following cautious commentary from HPCL management during its earnings call. The company stated that the June quarter is expected to remain challenging due to elevated crude prices and geopolitical uncertainty, with potential losses likely during Q1 FY27.

HPCL added that it currently maintains around two months of secured crude supply and remains adequately supplied till July. The company also highlighted that sourcing patterns have shifted during the ongoing West Asia crisis, with dependence on Persian Gulf crude reducing and Russian crude procurement increasing.

On the LPG front, HPCL reported under recoveries of Rs 1,350 crore during the quarter and said it received government compensation of Rs 3,300 crore toward LPG subsidies.

Management further stated that while crude supply remains available through multiple sourcing avenues, including African and South American suppliers, the current environment remains highly volatile, making forward guidance difficult.

Brokerage sentiment around HPCL has also weakened in recent weeks. Nearly one third of analysts tracking the stock now maintain a “Sell” rating, marking the highest proportion seen in the last two years. Nomura recently downgraded the stock to “Neutral” from “Buy” and reduced its target price to Rs 440 from Rs 550 earlier. Other brokerages including CLSA, ICICI Securities and Equirus Securities have also downgraded the stock.

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