Hindustan Petroleum Corporation Ltd shares declined significantly in Tuesday's trading session, falling 4% following a rating downgrade from JPMorgan. The Maharatna PSU company, which specializes in refining crude oil and marketing petroleum products, saw its stock price drop to a low of ₹437.70 from the previous close of ₹453.90.

JPMorgan Downgrades HPCL to Neutral

JPMorgan downgraded Hindustan Petroleum Corporation Ltd to 'Neutral' citing multiple concerns about the company's near-term prospects. The brokerage highlighted limited upside potential due to elevated balance sheet leverage and anticipated earnings pressures from the upcoming Rajasthan refinery commissioning.

The downgrade impacted the broader oil marketing company sector, with state-owned peers Bharat Petroleum Corporation Ltd and Indian Oil Corporation Ltd also experiencing selling pressure. However, JPMorgan maintained its 'Overweight' stance on BPCL and IOCL, indicating continued confidence in their sector performance.

Sector Performance and Future Outlook

Despite the recent downgrade, oil marketing companies have delivered strong returns over the past 12 months. HPCL, BPCL, and IOCL shares have risen between 23-30%, significantly outperforming the Nifty index, which gained approximately 10% during the same period. This rally has been primarily driven by robust earnings upgrades across the sector.

JPMorgan noted that while potential exists for near-term FY26 earnings upgrades, the focus has shifted to FY27 estimates. Sustained upside in OMC stocks will largely depend on revisions to FY27 earnings forecasts, making this a critical period for sector performance.

Excise Duty Policy Impact

The brokerage emphasized that excise duty policy will play a decisive role in future earnings. FY27 earnings could face downside pressure if fuel taxes increase by ₹2 per litre, while stable or unchanged tax rates could support earnings improvement. JPMorgan estimates that a $1 per barrel change in average FY27 crude prices could impact OMC EBITDA by approximately 7%.

The central government's revenue collections currently running below budget raise the possibility of additional revenue generation through higher excise duties. Every ₹2 per litre increase could generate approximately ₹34,000 crores. Importantly, any excise duty hike need not coincide with the Union Budget, as demonstrated by the previous increase implemented in April 2025.

Financial Performance Highlights

Despite market concerns, HPCL demonstrated solid financial performance in recent results. The company's revenue increased by 0.90% from ₹99,957 crores in September 2024 to ₹1,00,856 crores in September 2025. More notably, net profit showed substantial improvement, rising from ₹143 crores to ₹3,859 crores during the same period.

The company maintains strong financial health indicators with a Return on Capital Employed of 10.5% and Return on Equity of 13.8%, demonstrating efficient utilization of both capital and equity. The stock trades at a P/E ratio of 6.77, significantly below the industry average of 10.8, potentially indicating undervaluation despite current market concerns.

Hindustan Petroleum Corporation Ltd operates as a major public sector enterprise under the Ministry of Petroleum & Natural Gas. The company maintains refineries in Mumbai and Visakhapatnam, holds the second-largest retail network in India, and contributes 13.87% of the country's refining capacity while capturing a 20.3% share of the domestic petroleum products market.

Hindustan Petroleum Corporation Limited has announced a board meeting scheduled for January 21, 2026, to review and consider the company's unaudited financial results for the third quarter of fiscal year 2026. Following the board meeting, the company will host a conference call on January 22, 2026, to discuss the Q3FY26 earnings with stakeholders.

Board Meeting Details and Regulatory Compliance

The board meeting has been convened in accordance with Regulation 29(1) and (2) and Regulation 50(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The primary agenda includes consideration of the unaudited financial results for the quarter ended December 31, 2025.

Conference Call Arrangements

Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Hindustan Petroleum has scheduled a conference call for January 22, 2026, at 11:00 AM IST. The conference call will be hosted by Antique Stock Broking Limited and will feature discussions on Q3FY26 earnings with the senior management team.

Senior Management Participation

The conference call will include key executives from Hindustan Petroleum:

Trading Window Restrictions

In line with the company's insider trading protocols, Hindustan Petroleum has implemented trading window restrictions for all designated insiders. The trading window closure, which was initially announced on December 26, 2025, will continue until January 23, 2026. This measure ensures compliance with the company's Insider Trading Code and prevents any potential misuse of unpublished price-sensitive information.

Access and Participation Details

The company has confirmed that no unpublished price sensitive information is proposed to be discussed during the conference call. Participants can join the conference call using universal access numbers +91 22 6280 1342 and +91 22 7115 8243, with international toll-free numbers available for global participants.

The formal notices for both the board meeting and conference call have been submitted to BSE Limited (script code: 500104) and National Stock Exchange of India Limited. The communications were signed by Rakesh Kumar Singh, Company Secretary, and bear the digital signature dated January 14, 2026.