Hindustan Petroleum (NSE:HINDPETRO, BOM:500104) shares closed Thursday trading 3% in the red as the Indian state-run refiner's solid fiscal 2026 results were overshadowed by warnings of a "very tough" start to the year.
On Wednesday, the company, also known as HPCL, logged a record high for profit after tax during the year ended March, backed by its highest-ever crude throughput and a 3.3% growth rate for sales volume.
"Our PAT for the year standalone is INR 17,175 crores. This is 233% of the PAT of last year, so up 133%. The previous best ever HPCL had recorded was INR 14,654 or something. This is 17% higher than the previous best HPCL has ever recorded. The consolidated PAT was INR 18,047 crores. Two of our refinery investments, HMEL and MRPL, contributing strongly, especially in Q4. We are excited about this performance," Chairman Vikas Kaushal said.
At the same earnings call, however, Kaushal confirmed downbeat expectations for the current quarter. "Q1, we expect it to be very tough. You all are aware of the situation. The crudes are very expensive, product prices are low, and everything is quite volatile. As of where we stand, there would be losses in the Q1," he added.
Analysts took note of the negative sentiment, including Nomura, which said Thursday that it lowered its rating on the company to neutral from buy, with the price target falling to 440 rupees from 550 rupees amid a "negative" near-term outlook for the stock.
Jefferies also cut its estimates for HPCL, adding that it sees "multiple headwinds ahead."
"Cut estimates, retain UNPF: We further cut our FY27E PAT from -Rs 24bn to -Rs 178bn and reduce FY28E PAT by 18%, factoring in marketing losses and forex depreciation closer to spot, with no hike in retail fuel prices. HPCL trades at a higher valuation than peer BPCL despite the lower full-cycle RoCE. We value HPCL at 1.4x (in line with long term average) Mar-27 forward PB with a revised PT of Rs 275," Jefferies analysts wrote Wednesday.
