'Buy' HPCL Shares Maintains Motilal Oswal, Sees Upto 31% Upside — Check Target Price

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Motilal Oswal Report

We continue to prefer Hindustan Petroleum Corporation Ltd. among oil marketing companies due to the following factors:

1. HPCL’s higher leverage toward the marketing segment,

2. higher dividend yield as HPCL’s capex cycle is tapering off, and

3. the start-up of HPCL’s multiple mega-projects over the next 12 months, providing a push to earnings.

HPCL currently trades at 1.3x FY27E P/B. We estimate the company to deliver 29.3%/19.9% RoE during FY26/27 and project a 3.8% FY27E dividend yield.

Our earnings assumptions remain conservative as we build in a refining gross refining margin of $6.5/barrel of oil and an motor spirit/high speed diesel gross marketing margin of Rs 3.5/litre.

We have not assumed any significant benefit from:

1. the start-up bottom-upgrade unit and

2. Project Samriddhi, which has unlocked savings worth $0.5/bbl in H1 FY26.

We reiterate our Buy rating on the stock with our SoTP-based target price of Rs 590.

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