HPCL slumps 4% while BPCL gains despite Q1 net loss; decoding the divergent stock price reaction

Shares of Bharat Petroleum and Hindustan Petroleum are in focus after their Q1 earnings release on Wednesday. Both the oil marketing companies reported steep losses for the quarter as a result of high crude oil prices. However, Bharat Petroleum shares are witnessing buying strength after the opening, while HPCL share price plunged over 4% on Thursday morning and continues to trade in the red at 11:30 am.

Here’s why shares of leading OMCs receive divergent reactions to earnings.

Operating income

HPCL and BPCL reported subdued earnings across the board for Q1FY27 on expected lines as higher crude oil prices continue to dent the operating income. Hindustan Petroleum’s Q1FY27 revenue jumped 20.8% YoY to ₹1,45,126 crore as compared to ₹1,20,135 crore in Q1FY26. However, owing to high crude oil prices, the company posted an operating loss (EBITDA) of ₹14,860 crore for the quarter. Similarly, Bharat Petroleum’s Q1FY27 revenue jumped 23% YoY to ₹1.59 lakh crore as compared to ₹1.29 lakh crore in the same period last year. Similarly, at the operating level, the company witnessed a steep rise in input costs at ₹90,588 crore as compared to ₹53,686 crore. The core operating margins for the quarter dropped to -4.1% as compared to 5.7% in the previous year.

Gross refining margins

On the refining margins front, Bharat Petroleum outperformed HPCL by a significant margin, which boosted investor sentiment for BPCL shares on Thursday. Bharat Petroleum, despite the steep rise in crude oil prices, managed to post GRM of $41.1 per barrel for Q1FY27, boosted by marketing or inventory gains of ₹3,134 crore during the quarter. On the flipside, HPCL posted a gross refining margin of $23.8 per barrel, nearly half that of BPCL. Additionally, BPCL also recorded a forex gain of ₹350 crore, which cushioned the overall performance of the company during the quarter.

Profits vs estimates

The street remained unanimous on the expectations of net loss for oil marketing companies led by a sharp surge in crude oil prices. However, Bharat Petroleum outperformed and posted a lower-than-expected net loss as compared to street estimates. Nomura projected a net loss of ₹12,632 crore for BPCL in Q1FY27, and the company delivered a net loss of ₹3,960 crore, significantly lower than expectations. On the flipside, Hindustan Petroleum’s net profit came in line with the street expectations of ₹11,456 crore.

In conclusion

In summary, BPCL’s Q1FY27 results were better than the estimates, boosting investor sentiment around the stock. Additionally, the company boasts cheaper valuations at 8.8x price-to-earnings vs HPCL at 48.8x. Similarly, Bharat Petroleum’s debt-to-equity ratio also remained in a comfortable position at 0.5x as compared to 0.8x of BPCL.

In the longer term, BPCL has outperformed HPCL with 98% (CAGR) profit growth over three years as against 66% for HPCL. Hence, investor preference looks tilted more towards Bharat Petroleum after today’s post-earnings fall. However, amid the evolving situation in crude oil markets, whether BPCL will be able to maintain valuation dominance over HPCL warrants close monitoring.