HPCL/BPCL: Tough 1Q; Higher oil prices again top of mind, but not fully priced into shares; remain Neutral

Research evidence excerpt

HPCL/BPCL: Tough 1Q; Higher oil prices again top of mind, but not fully priced into shares; remain Neutral

Equity Research

24 July 2026 | 9:22AM SGT

INDIA ENERGY

HPCL/BPCL: Tough 1Q; Higher oil prices again top of mind, but not fully

priced into shares; remain Neutral

HPCL and BPCL’s 1Q results were mixed, reporting earnings miss and beat Nikhil Bhandari

+65-6889-2867 |

respectively, as the latter reported significantly stronger refining margins. HPCL’s 1Q nikhil.bhandari@gs.com

Goldman Sachs (Singapore) Pte

loss represented ~20% of FY26 book value. The divergence in strong refining print at

Randy LauBPCL vs HPCL was potentially due to (1) higher mix of discounted Russian crude +65-6889-2468 | randy.lau@gs.com

which constituted ~38% of BPCL’s procurement in 1Q besides new grades from Goldman Sachs (Singapore) Pte

Venezuela and Angola, (2) higher crude inventory losses at HPCL due to significant

inventory holding at the end of 1Q which coincided with a sharp decline in oil prices,

vs near normal crude inventory holding (~35 days) for BPCL, and (3) weaker refining

capture at Vizag refinery of HPCL as the residue upgradation unit faced technical

challenges alongside locational disadvantage resulting in higher crude premiums and

crude inventory requirement.

We believe upside risks to oil prices (escalating geopolitical tensions) and further

downside risks to marketing margins in coming quarters are again top of mind for

investors. Our Commodities team sees two-sided oil price risks but skewed to the

upside on net, especially in the near term where Brent could exceed US$120/bbl in

Dec’26 quarter and average US$100/bbl in CY27 if Hormuz remains disrupted

through CY27, with further upside if the Bab-al-Mandab Strait and Suez are also

permanently disrupted.