A leading oil and gas company, renowned for its refining and marketing operations and consistent dividend payouts, is in focus as analysts highlight its stock as an attractive buy. This article explores a prominent brokerage’s bullish call, projecting a 27 percent upside to a Rs. 500 target, driven by valuation appeal and high dividend yield prospects.
Hindustan Petroleum Limited‘s stock, with a market capitalisation of Rs. 85,900 crores, rose to Rs. 406.25, up 0.88 percent from its previous closing price of Rs. 402.70. Furthermore, the stock over the past year has given a negative return of 21.75 percent.
Rating Upgrade
Emkay, a reputed brokerage firm, has recommended a “Buy” call on Hindustan Petroleum Corporation Limited (HPCL) with a target price of Rs. 500 per share, indicating an upside potential of 25.94 percent from the report publishing day’s close of Rs. 397.
Rationale
HPCL reported strong Q4FY25 results, with EBITDA at Rs 5,730 crore and profit at Rs 3,350 crore, much better than expected. This was helped by higher refining margins of $7.1 per barrel and strong marketing margins. HPCL’s fuel sales grew 2.6 percent, even as the overall industry declined by 1.8 percent, helping it gain market share. However, LPG losses increased to Rs 3,300 crore, and net debt rose to Rs 57,900 crore. The new CMD plans to focus on getting better returns from ongoing projects and reducing debt by generating more free cash flow.
For the next two years, HPCL plans to invest Rs 13–14,000 crore annually, mainly in refining, marketing, and equity funding. The company’s debt-to-equity ratio has slightly improved and is expected to get better. Major projects like the Vizag refinery upgrade (expected by Q2FY26) and the Barmer refinery (by early 2026) are progressing well and should improve profits. Based on better margins, the earnings forecast has been raised, and the target price increased from Rs 450 to Rs 500, with a continued “Buy” rating.
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Performance Growth
HPCL delivered a strong Q4 performance with refining volumes rising 4 percent QoQ at 6.7 million metric tonnes and plant utilisation improving to 118 percent from 111 percent last quarter. Blended marketing margins came in at ~Rs 5.5/kg, beating estimates by 16 percent. Domestic sales volumes rose 2.6 percent YoY to 12.1 mmt, outperforming the industry’s 1.8 percent decline, while exports increased 7 percent QoQ. Petrol sales grew 4.1 percent YoY, though diesel declined 1 percent.
Financial Highlight
In Q4FY25, the company reported revenue of Rs. 1,09,633 crore, reflecting a 4.4 percent YoY decline from Rs. 1,14,678 crore in Q4FY24 and a marginal 0.9 percent QoQ dip from Rs. 1,10,608 crore in Q3FY25. Despite the revenue drop, net profit surged to Rs. 3,415 crore, up 26 percent YoY from Rs. 2,709 crore and 34.2 percent QoQ from Rs. 2,544 crore, indicating strong operational efficiency and improved margins.
The company has delivered a 5-year profit CAGR of 15 percent, sales CAGR of 10 percent, and ROE CAGR of 17 percent, reflecting consistent growth and strong returns. The board has declared a final dividend of Rs. 10.5 per share, taking the dividend yield to 2.59 percent, underscoring its commitment to shareholder returns.
Written By Fazal Ul Vahab C H
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