Shares of Hindustan Petroleum Corporation Limited (HPCL) rallied by 4.48%, reaching ₹378.35 on the NSE on January 24, following the announcement of its strong Q3 performance for FY25. The oil marketing PSU reported a remarkable surge in its net profit, which more than tripled to ₹2,543.65 crore for the October-December 2024 quarter, compared to ₹712.84 crore in the same period a year earlier. This robust profit growth was largely driven by a significant improvement in marketing margins, as the company, along with other state-owned fuel retailers like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL), kept retail fuel prices frozen, despite a decline in global oil prices.
HPCL’s decision to maintain fuel prices at their current levels, despite falling international oil prices, helped boost its profitability in the third quarter. The company’s pre-tax earnings from its downstream fuel retailing business soared to ₹4,566.07 crore, compared to ₹981.02 crore in the same quarter last year. This strategy of freezing prices has been justified by HPCL and its peers as a way to recover losses incurred when global oil prices rise, ensuring stability for both consumers and the companies. During the quarter, crude oil prices hovered around USD 74 per barrel, down from the USD 85 per barrel level seen during the previous year.
In addition to the increase in marketing margins, HPCL processed 6.47 million tonnes of crude oil in Q3 FY25, up from 5.34 million tonnes in Q3 FY24. The company also recorded higher fuel sales, with 12.32 million tonnes sold, compared to 11.36 million tonnes in the same period last year. These operational improvements, alongside the favorable market conditions, contributed to HPCL’s strong financial performance. However, the company did face an under-recovery of approximately ₹3,100 crore on the sale of domestic cooking gas (LPG) at the government-controlled price, which is expected to be compensated by the government in the form of subsidy support.
Despite the LPG under-recovery, HPCL reported steady income from operations, amounting to ₹1.18 lakh crore, similar to the previous quarter. For the first nine months of FY25, the company had an under-recovery of ₹7,598.93 crore on LPG sales. This ongoing subsidy burden highlights the challenges HPCL faces in the regulated pricing environment but has not significantly impacted its overall profitability. With strong refining and marketing performance, HPCL has demonstrated resilience in a challenging global oil market, positioning itself well for future growth as demand for fuel continues to rise.
