Whalesbook
Financial Performance Snapshot: Q3 FY26
Hindustan Petroleum Corporation Ltd (HPCL) reported its financial results for the quarter ending December 31, 2025 (Q3 FY26), revealing a robust year-on-year performance in net profit. Consolidated net profit surged by 57.7% to ₹4,011.40 crore, compared to ₹2,543.65 crore in the same period last fiscal year. Revenue from operations also saw a rise, increasing by 4.66% year-on-year to ₹1,24,582.65 crore. On a standalone basis, net profit climbed 34.7% to ₹4,072.49 crore.
Despite the strong year-on-year profit growth, the results are interpreted by some as a miss against market expectations, particularly concerning Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) and margins [cite: Source A]. While Gross Refining Margins (GRMs) stood at $8.85 per barrel for Q3 FY26, an improvement from $6.01 per barrel in Q3 FY25, analysts had estimated GRMs around $10 per barrel. Quarter-on-quarter, EBITDA saw a 1.9% decline, and margins contracted to 6.1% from 6.8% in Q2 FY26, aligning with the 'miss' narrative on these specific metrics.
Operational Highlights and Strategic Developments
HPCL's refineries demonstrated efficient operations, achieving a crude throughput of 6.38 million tonnes in Q3 FY26. The Visakh refinery operated at 106% of its nameplate capacity, contributing to overall refinery utilization. Marketing operations remained steady, with total sales volumes rising 3.7% year-on-year to 13.34 million tonnes, driven by increased sales of petrol, diesel, and LPG.
In terms of strategic expansion, the company's Rajasthan refinery project is nearing completion. Crude processing at the Barmer refinery is expected to commence by the end of January 2026. This project, a joint venture with the Rajasthan government, has a refining capacity of 9 million tonnes per annum. While previous timelines indicated commissioning by December 2025, the current focus is on the commencement of crude processing, with full operational benefits anticipated by fiscal year 2027.
Analyst Sentiment and Valuation Metrics
Analyst sentiment on HPCL remains divided following the quarterly announcement. Out of 34 analysts covering the stock, approximately two-thirds maintain a 'buy' rating. Jefferies, however, has maintained an 'Underperform' rating and reduced its price target to ₹385 from ₹405, citing that the December quarter missed estimates and that valuations appear full. Jefferies noted that while lower crude oil outlook is supportive for marketing margins, the EBITDA was 11% below their estimates due to weaker refining performance. They also highlighted that the upcoming Rajasthan refinery commissioning by early FY27 could be a drag on profitability, leading to a 3% cut in FY26E PAT.
Citi reiterates a 'Buy' rating with a price target of ₹595, suggesting a potential 38% upside. CLSA maintains a 'Hold' rating with a target price of ₹420 [cite: Source A].
As of January 19, 2026, HPCL is trading at a P/E ratio of approximately 6.7x its annualized fiscal year 2026 earnings and a price-to-book (P/B) ratio of 1.64x. The company reported a nine-month EPS of ₹65.46 and a Book Value Per Share of ₹267.36.
Market Performance and Peer Comparison
Shares of HPCL are trading around ₹429.7 on Thursday, January 22, 2026, showing little change [cite: Source A]. Over the past 12 months, the stock has appreciated by approximately 16% [cite: Source A].
In comparison to its peer Bharat Petroleum Corporation Ltd (BPCL), HPCL's valuation metrics are similar. BPCL trades at a P/E ratio of approximately 7.4x and a P/B ratio of around 1.7x. Jefferies previously noted HPCL's valuations were considered full and at a premium to BPCL, though current data suggests comparable valuations in terms of P/E and P/B ratios.