BPCL, GAIL, HPCL Keep HSBC's 'Buy' Even As India's Petroleum Demand Slows

India's petroleum products' demand is slowing down, which will continue especially on diesel side, as stricter emission norms come into place, HSBC Global Research said in a note. The brokerage kept 'buy' rating on Bharat Petroleum Corp., GAIL (India) Ltd., Hindustan Petroleum Corp. and Indian Oil Corp.

India's oil production will be growing marginally, HSBC Global Research said in a note. The marginal growth will be contingent on Oil and Natural Gas Corp.'s ability to deliver on–schedule production, and reduce the fall in nomination blocks.

The brokerage expects at least 25% growth in liquefied natural gas regas capacity, which will likely enhance India's ability to absorb LNG. "On the refining side, India is expected to increase its capacity by 9%, adding 0.5 million barrel per day."

Oil and gas companies may start their investments in energy transition. Renewables, green hydrogen blending, and investment preparation for green hydrogen. "We also expect the start of refinery transformation projects to orient towards petrochemicals."

HSBC Global Research sees brent crude to trade at $70 a barrel. The outlook for the crude oil remains stable in 2025, while it worsens in 2026 as surplus grows and volumes return.

On the other hand, liquefied natural gas market to remain tight in 2027.

Global refining and petrochemical cycle likely to remain weak. New petrochemical and refinery capacity is still being commissioned, according to HSBC Global Research. The brokerage doesn't see recent uptick in refining margin to last long because of seasonal maintenance and economic run cuts.

"We expect transportation fuel (highest-margin product) demand growth to slow on worries in the Chinese economy and gradually increasing penetration of EVs."

Petrochemical remains oversupplied and refining companies are further focusing on diverting their products towards petrochems.