BPCL and HPCL shares have surged over 50% since March. Investors are optimistic due to falling crude oil prices and expectations of b quarterly results.
Stock Market: Shares of two major Oil Marketing Companies (OMCs) in India, Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL), have witnessed a remarkable surge in recent months. In just four months, these companies' stocks have jumped by more than 50%. Brokerage firms and market analysts believe this surge is driven by factors such as falling crude oil prices, expectations of robust quarterly results, and reduced inventory losses.
Shares Approaching Record Highs
On Tuesday, HPCL's share on the BSE gained approximately 2%, reaching ₹452.4, very close to its record high of ₹457.20. This record was set on September 5, 2024. From a low of ₹287.55 in March 2025, HPCL shares have risen by about 57%.
Similarly, BPCL's share was trading at ₹357.55, while its record high of ₹376 was recorded on September 30, 2024. In March, BPCL's share had fallen to ₹234.15, and it has since surged by approximately 53%.
Lower Oil Prices Boost Profits
Experts believe that crude oil prices fell by approximately 12% in the quarter from March to June 2025. Year-on-year, this decline reaches 18%. Despite this, the prices of petrol and diesel remained stable, leading to improved refining margins for companies like HPCL, BPCL, and IOCL.
Furthermore, the central government recently made a minor increase in the price of domestic LPG, which helped to offset the impact of the ₹2 per liter excise duty. Also, crude prices increased again in June, meaning old stock was no longer cheap, reducing the risk of inventory losses.
Brokerage Houses' Estimates
According to Kotak Institutional Equities, BPCL's EBITDA in Q1FY26 could increase by 53% quarter-on-quarter and 2.1 times year-on-year. For HPCL, this estimate is for a 49% quarterly and 4.1 times annual growth.
It is also estimated that IOCL's EBITDA will increase by 31% quarter-on-quarter and 2.1 times year-on-year. JM Financial has also indicated in its report that HPCL and BPCL's EBITDA could increase by 52% to 69%, mainly due to good earnings from retail fuel. However, IOCL will benefit less due to inventory losses.
Divergent Views on Long-Term Strategy
While JM Financial has adopted a cautious approach towards oil marketing companies, Elara Capital has a positive outlook on these companies. JM believes that the risk-reward ratio in OMCs is not balanced due to high valuations and large capital expenditures.
Elara Capital believes that the government may allow OMCs to earn more profit than historical margins, considering the energy sector's transition. According to analysts, BPCL will need a margin of at least ₹3250 per ton to double its profits in the next five years.
HPCL's Growth Strategy
According to a report by Geojit Financial Services, HPCL expects stability in crude oil prices in the current financial year, which could boost profits. The company has expanded its retail network and seen an increase in sales at its outlets. It has also intensified its marketing efforts to increase its market share and sustain future growth.
