BPCL, HPCL, IOC Keep HSBC's 'Buy' As Low Crude Prices, Less Intervention In Petrol Prices To Support Margins

HSBC Global Research retained its views on Bharat Petroleum Corp., Hindustan Petroleum Corp., and Indian Oil Corp. as low crude oil prices, and less government intervention in domestic petrol prices will support margins, it said. The brokerage retained 'buy' on Bharat Petroleum, Hindustan Petroleum and Indian Oil.

This comes in the backdrop of falling Indian unit and sanction on Russian crude supply. Rupee depreciation has emerged as the biggest risk, with sudden sharp decline after two years of relative calm. "Every Rs 1 depreciation per USD can have a Rs 0.5/litre impact on marketing margin," according to HSBC Global Research.

To add to the woe, sanction on Russian crude supply will impact refining margins of oil marketing companies from mid-March. Sanctions allowed exemption for crude loaded before Jan. 10 and unloaded before March 12. Hence, the impact will start reflecting from first quarter of financial year 2026, HSBC Global Research said.

US crude will fill deficit, as India can use this as a bargaining chip with the country, according to the brokerage. This will indirectly protect the Indian rupee. "We note that in 2021, India was one of the largest purchasers of US crude, but this changed due to the Red Sea shipping crisis," HSBC Global Research said.

Oil marketing companies cumulatively made an under-recovery of Rs 28,400 crore in nine months of financial year 2025 on LPG. Market participants were expecting that the centre will subsidise it, but no allocation was made in the budget. Moreover, price pressure is decreasing in India. In this backdrop, HSBC Global sees strong case for the government to stay away from intervening in petrol pump prices. This will make space for the companies in the segment to make healthy margins by setting up pump prices.

Now, the centre expects that oil marketing companies will do capital expenditure to support the economy through capital expenditure.

Auto fuel demand in India sustained decent momentum in last three months. Auto fuels constitute 55% of total product consumed in India. January witnessed demand for petrol by 6.7% on the year, diesel by 4.2%, and aviation turbine fuel grows with a run rate of 8–9% year on year.