HPCL Q2: Profit Returns, ₹18,049 Crore of LPG Losses Wait
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
- Any government decision on the LPG buffer.
- Whether marketing margins recover in the December quarter.
- Current borrowings and the debt-equity ratio at December.
- 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 (NSE)
- [P] Hindustan Petroleum, Q2 FY27 press release (NSE)
- [MS] Moat & Margin, Moat Screener and How MoatSCORE works
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.
Member discussion