> ## Content Index > Fetch the complete content index at: https://www.moatmarginresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # HPCL Q2: Profit Returns, ₹18,049 Crore of LPG Losses Wait - URL: https://www.moatmarginresearch.com/hpcl-q2-grm-lpg-buffer-debt/ - Published: 2026-10-23T01:42:32.000Z - Updated: 2026-10-23T01:42:32.000Z - Description: HPCL earned US$32.15 a barrel refining and returned to profit, but the half year shows a loss, debt up sharply and ₹18,049 crore of uncompensated LPG losses. Wh - Author: A K Karthikeyan - Tags: Moat Insights **Hindustan Petroleum made a standalone profit of ₹3,483 crore in the September quarter, on a gross refining margin of US$32.15 a barrel, more than three and a half times last year's US$8.80\. But the June quarter's ₹11,526 crore loss still leaves the half year ₹8,044 crore in the red. To get through it, HPCL borrowed: its borrowings rose by about ₹17,860 crore in six months. And a note in the results shows ₹18,049 crore of losses on domestic LPG for which no compensation has been booked.** ## The two quarters | Standalone, ₹ crore | Q2 FY26 | Q1 FY27 | Q2 FY27 | H1 FY27 | | -------------------------- | -------- | ----------- | -------- | ----------- | | Profit / (loss) before tax | 5,118.85 | (17,446.10) | 6,767.65 | (10,678.45) | | Net profit / (loss) | 3,830.37 | (11,526.41) | 3,482.62 | (8,043.79) | | Debt-equity ratio (times) | 1.07 | 1.52 | 1.38 | 1.38 | Source: \[R\]. Consolidated profit was ₹3,625 crore for the quarter and the consolidated half-year loss ₹8,639 crore (\[P\]). ## Refining: the best margin in the filings - **GRM:** US$32.15 a barrel in the quarter and US$27.89 for the half year, against US$8.80 and US$5.95 a year ago (\[P\]). - **Throughput:** 6.20 million tonnes in the quarter, 100% of capacity; Mumbai ran at 109% and Visakh at 95% (\[P\]). - The results add that the GRM is "before factoring-in the Impact of Special Additional Excise Duty and Road & Infrastructure Cess on export of select petroleum products" (\[R\]). ## Marketing: where the money went The results say that in April–September, "due to the supressed marketing margins on certain petroleum products, the profitability is lmpacted" (spellings as in the filing) (\[R\]). The press release refers to "the ongoing West Asia crisis" (\[P\]). Neither gives a figure for the marketing loss. Sales still grew: 12.73 million tonnes in the quarter, up 5.5%, with petrol and diesel up 10.0% (\[P\]). ## The LPG buffer Note 5 of the results explains how HPCL accounts for selling domestic LPG below cost. When the market-determined price is below the effective cost to consumers, it keeps the difference in a "buffer account" but does not book it as revenue or a receivable without a government scheme (\[R\]). | ₹ crore | 30 Sep 2025 | 31 Mar 2026 | 30 Sep 2026 | | ----------------------------------------------- | ----------- | ----------- | ----------- | | Cumulative negative LPG buffer (not recognised) | 14,240.64 | 12,798.67 | 18,048.82 | Source: \[R\]. The buffer grew by ₹5,250 crore in six months (our arithmetic). Separately, the oil ministry had in October 2025 granted ₹7,920 crore of compensation for LPG under-recoveries up to March 2026, paid in 12 monthly instalments. Six instalments, ₹3,960 crore, were booked in the half year as revenue (\[R\]). Accrual began in November 2025, so that compensation is almost fully booked (our reading of the note); the filing gives no compensation for the newer buffer. ## The balance sheet | Standalone, ₹ crore | 31 Mar 2026 | 30 Sep 2026 | | ----------------------- | ----------- | ----------- | | Borrowings, non-current | 32,245.73 | 29,530.66 | | Borrowings, current | 15,352.93 | 35,927.51 | | Inventories | 39,408.53 | 45,353.93 | | Other equity | 57,718.88 | 45,259.41 | Source: \[R\]. Total borrowings rose by about ₹17,860 crore and other equity fell by about ₹12,460 crore (our arithmetic). Operating cash flow for the half year was –₹7,832.22 crore, against +₹19,099.58 crore a year earlier (\[R\]). ## Moat and margin **Focus moat: scale and reach in fuel marketing.** HPCL runs 25,245 retail outlets and 6,394 LPG distributors (\[P\]). That reach is real, but the filings show its limit: when prices for consumers are held below cost, the network sells at a loss, and the compensation depends on the government. **Margin: refining at a high, marketing squeezed.** The quarter's profit shows what a US$32 refining margin can do; the half year shows it was not enough to cover June. **MoatSCORE** (Moat Screener, first pass): Hindustan Petroleum 5.25, AMBER+; for comparison, Indian Oil 5.81, AMBER, and Bharat Petroleum 5.77, RED (\[MS\]). ## The bear case - **The half year is still a loss**, ₹8,044 crore, despite a near-record refining margin. - **Debt has risen fast:** current borrowings more than doubled in six months, and debt-equity is 1.38 against 0.80 in March (\[R\]). - **₹18,049 crore of LPG losses have no agreed compensation**, and the amount grew by ₹5,250 crore in six months. - **The refining margin may not last;** the filings do not say what drove it. ## The case for - **The September quarter was profitable** on both refining and volume growth. - **LPG compensation has been granted before:** ₹7,920 crore for under-recoveries up to March 2026, of which ₹3,960 crore was booked this half year (\[R\]). - **HPCL Rajasthan Refinery (HRRL) was upgraded** to AA+ by Crisil, and ₹51,970 crore of its debt was refinanced at a lower cost (\[P\]). ## What to watch 1. Any government decision on the LPG buffer. 2. Whether marketing margins recover in the December quarter. 3. Current borrowings and the debt-equity ratio at December. 4. The refining margin as the West Asia situation develops. ## Sources - **\[R\]** [Hindustan Petroleum, unaudited results for the quarter and half year ended 30 September 2026](https://nsearchives.nseindia.com/corporate/HINDPETRO1%5F22102026165513%5FBM%5FH1%5FResults%5Fsigned.pdf) (NSE) - **\[P\]** [Hindustan Petroleum, Q2 FY27 press release](https://nsearchives.nseindia.com/corporate/HINDPETRO1%5F22102026172415%5FPressreleaseSEIntimation%5Fsigned.pdf) (NSE) - **\[MS\]** [Moat & Margin, Moat Screener](https://www.moatmarginresearch.com/moat-screener/) and [How MoatSCORE works](https://www.moatmarginresearch.com/moatscore/) --- > Educational research, not investment advice. Every figure above is drawn from Hindustan Petroleum's own filings, read from the primary documents on 23 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE read live from the Moat Screener on 23 October 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.