HPCL Q2FY27 Net Profit Falls 6% to Rs 3,625 Crore Despite Fourfold Jump in Refining Margins

State-owned Hindustan Petroleum Corporation Ltd (HPCL) reported a 6 per cent year-on-year (YoY) decline in consolidated net profit to Rs 3,625.22 crore for the quarter ended September 30, 2026 (Q2FY27), compared with Rs 3,859.30 crore in the corresponding quarter last year. Despite the decline in profit, the company recorded a sharp improvement in refining margins, while revenue from operations increased by more than 26 per cent.

HPCL had reported a consolidated net loss of Rs 12,264.67 crore in Q1FY27. The company returned to profitability in the September quarter, supported by improved fuel marketing margins following cumulative retail petrol and diesel price hikes of more than Rs 7 per litre in May 2026. However, higher costs and elevated crude oil prices continued to weigh on overall profitability.

HPCL's consolidated revenue from operations increased to Rs 1,39,113.50 crore in Q2FY27 from Rs 1,10,396.98 crore in Q2FY26. Total expenses also rose significantly to Rs 1,33,228.03 crore from Rs 1,05,981.18 crore in the year-ago quarter, limiting the improvement in net earnings.

Consolidated profit before Tax (PBT) increased by approximately 33 per cent YoY to Rs 6,820.13 crore from Rs 5,130.91 crore. However, the higher tax expense offset the improvement in pre-tax profitability. Tax expenses rose to Rs 3,195 crore in Q2FY27 from Rs 1,272 crore in the corresponding quarter last year, contributing to the decline in consolidated net profit.

HPCL's gross refining margin (GRM), a key indicator of profitability from processing crude oil into petroleum products, climbed to USD 32.15 per barrel in July-September 2026 from USD 8.80 per barrel in the corresponding period last year. This represented a near fourfold increase, reflecting significantly improved earnings from refining operations.

For the first half of FY27 (H1FY27), HPCL's average GRM increased to USD 27.89 per barrel from USD 5.95 per barrel in the corresponding period of FY26. The company's refineries processed 6.20 million metric tonnes (MMT) of crude oil during Q2FY27, operating at 100 per cent of their total capacity.

Despite the improvement in refining margins, HPCL continued to face pressure from elevated crude oil prices and subdued marketing margins on petroleum products. The company reported a consolidated net loss of Rs 8,639.45 crore in H1FY27, compared with a net profit of Rs 7,970 crore in the year-ago period. The conflict in West Asia pushed crude oil prices above USD 100 per barrel, increasing input costs and squeezing fuel marketing margins, which affected overall profitability.

On a standalone basis, HPCL reported a net profit of Rs 3,482.62 crore in Q2FY27, down approximately 9 per cent from Rs 3,830 crore in the corresponding quarter last year. Higher revenue and improved refining profitability were insufficient to offset the impact of rising tax expenses and operating costs. Nevertheless, the company recorded a sequential recovery, returning to profitability after posting a standalone net loss of approximately Rs 11,526 crore in Q1FY27.

HPCL's Q2FY27 performance reflected a combination of stronger refining margins, revenue growth and continued pressure on overall earnings. While the improvement in refining operations supported the company's return to quarterly profitability, higher crude oil prices, operating expenses and tax costs restricted growth in net profit.

Going forward, crude oil price movements, domestic fuel pricing decisions, marketing margins and refining spreads will remain key factors influencing HPCL's financial performance. Although the company recovered from its substantial losses in Q1FY27, the consolidated loss recorded in H1FY27 highlights the continuing impact of volatile energy prices on its earnings.

Disclaimer: The article is for informational purposes only and not investment advice.