New Delhi: Hindustan Petroleum Corporation Ltd (HPCL) is the most vulnerable among India’s major oil marketing companies (OMCs) if crude oil prices remain above USD 100 per barrel, according to an assessment by Equirus Securities.
The brokerage said sustained crude prices at this level could put pressure on all major OMCs, particularly if petrol, diesel and Liquefied Petroleum Gas (LPG) prices remain unchanged. The extent of the impact would depend mainly on retail-price pass-through, government policies and refining margins.
Crude Oil Above $100 Could Pressure OMCs
According to Equirus Securities, a prolonged period of crude prices above USD 100 per barrel could create several challenges for OMCs if retail fuel prices are not increased proportionately.
These risks include:
- Negative petrol and diesel marketing margins
- Higher LPG under-recoveries
- Increased crude-landing, freight and insurance costs
- Higher working-capital requirements
- Rising debt accumulation
- Inventory losses if crude prices subsequently decline sharply
Maulik Patel, Head of Research at Equirus Securities, said the impact would ultimately depend on how much of the higher input cost is passed on to consumers, along with government policies and refining cracks.
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Why HPCL Is Considered the Most Vulnerable
HPCL has the lowest refining-to-marketing ratio among the three major public sector OMCs, according to Equirus Securities.
- HPCL: Refining-to-Marketing Ratio – 51%; Distillate Yield – 76%
- BPCL: Refining-to-Marketing Ratio – 74%; Distillate Yield – 85%
- IOCL: Refining-to-Marketing Ratio – 80%; Distillate Yield – 80
HPCL’s refining-to-marketing ratio stands at 51%, compared with 74% for BPCL and 80% for Indian Oil Corporation Ltd (IOCL).
This means HPCL has the lowest internal refining cover among the three companies and is more dependent on purchased and imported petroleum products.
Its lower refining cover could make it more exposed to higher crude and product costs when crude prices rise sharply.
Lower Distillate Yield Adds to HPCL’s Pressure
HPCL also has the lowest distillate yield among the three OMCs, at 76%, compared with 80% for IOCL and 85% for BPCL.
A lower distillate yield limits HPCL’s ability to fully benefit when diesel and jet fuel refining cracks strengthen.
Equirus also pointed to HPCL’s balance sheet, where leverage is the highest among the three major OMCs. This could further increase the financial pressure if high crude prices persist.
IOCL Ranks Second in Vulnerability
Equirus Securities ranked IOCL as the second-most vulnerable major OMC under a sustained high-crude-price scenario.
IOCL has stronger refining integration than HPCL, which provides it with a greater refining buffer. However, its overall exposure remains substantial.
The risks for IOCL include:
- Fuel marketing exposure
- LPG under-recoveries
- Inventory impact
- Higher working-capital requirements
- Expensive crude procurement
- Petrochemical losses
Its stronger refining-to-marketing ratio provides some protection, but prolonged crude prices above USD 100 per barrel could still weigh on earnings if retail fuel prices remain unchanged.
BPCL Relatively Better Positioned
Bharat Petroleum Corporation Ltd (BPCL) is relatively better placed among the three major OMCs, according to Equirus Securities.
The brokerage highlighted BPCL’s stronger integration, highest distillate yield and relatively stronger balance sheet.
It also pointed to crude flexibility at the Bina refinery as an additional advantage.
These factors could provide BPCL with a stronger earnings buffer during periods of high crude prices compared with HPCL.
BPCL Named Preferred OMC by Equirus
Despite the near-term risks from high crude prices, Equirus Securities named BPCL as its preferred OMC as a contrarian play on a potential correction in crude prices.
According to the brokerage, BPCL’s better refining-to-marketing ratio and higher distillate yield provide a stronger integrated earnings buffer.
Equirus also noted that BPCL’s stock trades at a trailing price-to-book multiple of 1.3x, which it described as a cyclical low.
A sharp correction in crude prices could therefore provide scope for a meaningful rerating of BPCL, the brokerage said.
ONGC and Oil India Could Benefit From Higher Crude Prices
The impact of higher crude prices is different for upstream producers such as Oil and Natural Gas Corporation (ONGC) and Oil India Ltd.
Equirus Securities said both companies are among the most direct beneficiaries of higher crude realisations, although this benefit has not yet been fully reflected in their valuations.
Higher crude realisations can directly support upstream companies because their revenues are more closely linked to the price of crude oil they produce.
Reliance Industries Offers Balanced Oil-Linked Exposure
Equirus described Reliance Industries Ltd as a balanced oil-linked exposure because of its diversified business model.
Its oil-to-chemicals (O2C) operations can benefit from:
- Strong product cracks
- A diversified crude basket
- Feedstock flexibility
At the same time, Jio and Retail provide additional earnings diversification beyond the oil and gas business.
Equirus identified several potential catalysts for Reliance, including a sustained O2C recovery, improvement in Jio’s average revenue per user and margins, normalisation of Retail margins and execution in New Energy.
Rising LNG Prices Pose Risks for City Gas Distributors
City Gas Distributors (CGDs) face near-term margin pressure from higher spot Liquefied Natural Gas (LNG) prices and crude-linked LNG contracts, according to Equirus.
However, gas volumes remain relatively resilient.
CGD sector consumption increased to 55.2 MMSCMD in 2026-27 so far, compared with 45.3 MMSCMD in 2025-26. The imported share of gas has also increased sharply.
Within the sector, individual companies face different levels of exposure.
Gujarat Gas
Gujarat Gas is exposed to higher Brent-linked spot LNG prices as well as rupee depreciation. However, its gas-trading profits provide some offset to this exposure.
Mahanagar Gas
Mahanagar Gas Ltd has relatively better cushioning through Henry Hub-linked sourcing and pricing actions. Nevertheless, its margins could remain volatile in the near term.
Petronet LNG
Petronet LNG is more exposed to LNG affordability and regasification volumes. Equirus identified Qatar normalisation, tariff visibility and petrochemical capital expenditure as key factors to watch.
GAIL
GAIL (India) Ltd is considered relatively defensive because its gas transmission business provides an earnings buffer. Its petrochemical and gas-marketing profitability is also improving with higher realisations, according to Equirus.
Aviation, Tyres and Paints Among Most Vulnerable Sectors
Beyond the oil and gas sector, Equirus Securities’ broader vulnerability ranking places aviation at the top.
The sectors following aviation include:
- Tyres
- Paints
- Adhesives
These sectors could face pressure from higher energy, fuel or raw-material costs if elevated crude prices persist.
Key Takeaways From Equirus Securities’ Assessment
The brokerage’s assessment indicates that the impact of crude oil above USD 100 per barrel will differ significantly across companies.
HPCL faces the highest vulnerability among the major OMCs because of its lower refining cover, lower distillate yield and higher leverage.
IOCL benefits from stronger integration but remains exposed because of its large fuel marketing, LPG, inventory, working-capital and crude procurement exposure.
BPCL is relatively better positioned and has been identified as Equirus Securities’ preferred OMC, particularly as a potential beneficiary of a future correction in crude prices.
Meanwhile, ONGC and Oil India stand to benefit from higher crude realisations, while Reliance Industries offers more diversified oil-linked exposure.
About HPCL
Hindustan Petroleum Corporation Ltd (HPCL) is a major Indian public sector oil and gas company engaged in refining, petroleum product marketing and related energy businesses. The company operates refineries and a large fuel marketing network and is one of India’s key downstream oil companies.
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