HPCL Shares Fall 4% After JPMorgan Downgrades the Stock; Here’s Why

Synopsis: Hindustan Petroleum Corporation Ltd is in the spotlight after declining 4% in the day’s trade, following JPMorgan’s downgrade to “Neutral,” citing concerns over valuation limits, near-term earnings risks and more.

The shares of a Maharatna PSU stock specialising in the integrated business of refining crude oil and marketing petroleum products, serving India’s energy needs with fuels, lubricants, petrochemicals, and speciality products, are down by 4 percent in the day’s trade. In this article lets explore the reason for the fall.

With a market capitalization of Rs. 93,432.69 Crores on Tuesday, the shares of Hindustan Petroleum Corporation Ltd declined upto 3.56 percent, reaching a low of Rs. 437.70 compared to its previous close of Rs. 453.90.

What Happened 

Hindustan Petroleum Corporation Ltd, engaged in the integrated business of refining crude oil and marketing petroleum products are in the spotlight today as the stock has declined 4 percent in the day’s trade.

Reason for the fall

JPMorgan downgraded Hindustan Petroleum Corporation Ltd. (HPCL) to ‘Neutral’, citing concerns over valuation limits and near-term earnings risks. Along with it, the shares of state-owned oil marketing companies (OMCs) declined following this news. The stocks under pressure included HPCL, Bharat Petroleum Corporation Ltd. (BPCL), and Indian Oil Corporation Ltd. (IOCL).

JPMorgan has downgraded its rating on HPCL, citing limited upside due to elevated balance sheet leverage and potential earnings pressures from the upcoming Rajasthan refinery commissioning. Despite the HPCL downgrade, the brokerage maintains an ‘Overweight’ stance on BPCL and IOCL, reflecting confidence in their performance within the sector.

Over the past 12 months, HPCL, BPCL, and IOCL shares have risen 23–30%, significantly outperforming the Nifty, which gained around 10%. The rally has been largely driven by robust earnings upgrades.

FY27 Earnings Key to Further Upside

While JPMorgan sees potential for near-term FY26 earnings upgrades, the focus now shifts to FY27 estimates. Sustained upside in OMC stocks will depend on revisions to these FY27 earnings forecasts.

Excise Duty Clarity Crucial

Excise duty policy is expected to play a decisive role, and  FY27 earnings could face downside if fuel taxes rise by Rs. 2 per litre, while earnings could improve if no increase occurs, and clarity on this front is unlikely in the near term. JPMorgan estimates that a $1 per barrel change in average FY27 crude prices could impact OMC EBITDA by approximately 7%.

Government Revenue Considerations

Central government revenue collections are below budget, raising the possibility of additional revenue through higher excise duties. Every Rs. 2 per litre increase could generate around Rs. 34,000 crore ($3.8 billion).

An excise duty hike need not coincide with the Union Budget on February 1, 2026, as the last increase was on April 8, 2025. With no clear confirmation yet, positive earnings revisions may remain difficult until excise duties remain stable for a few months into FY27.

Financials & Others

The company’s revenue rose by 0.90 percent from Rs. 99,957 crore in September 2024 to Rs. 100,856 crore in September 2025. Meanwhile, the Net profit rose from  Rs. 143 crore to  Rs. 3,859 crore during the same period.

The company shows solid financial health, with a ROCE of 10.5% and an ROE of 13.8%, indicating efficient use of both capital and equity. Its stock trades at a P/E ratio of 6.77, well below the industry average of 10.8, highlighting potential undervaluation.

Hindustan Petroleum Corporation Ltd. (HPCL) is a major Indian public sector enterprise under the Ministry of Petroleum & Natural Gas, involved in refining crude oil and marketing petroleum products like petrol, diesel, LPG (HP Gas), lubricants, and aviation fuel across India, with refineries in Mumbai and Visakhapatnam, and extensive retail and distribution networks

It is a Maharatna Company with over 100 years of presence in India, and owns and operates the country’s largest lube refinery. It holds the 2nd largest retail network and cross-country product pipeline, contributing 13.87% of India’s refining capacity and capturing a 20.3% share of the domestic petroleum products market.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post HPCL Shares Fall 4% After JPMorgan Downgrades the Stock; Here’s Why appeared first on Trade Brains.