MarketsMOJO Upgrades Hindustan Petroleum Corporation Ltd. to Buy on Strong Fundamentals and Technical Improvement

Quality Assessment: Consistent Financial Strength and Growth

HPCL’s quality rating has been bolstered by its sustained financial performance over recent quarters. The company has reported positive results for four consecutive quarters, with the latest six-month Profit After Tax (PAT) soaring to ₹7,870.70 crores, representing an extraordinary growth of 192.99%. This surge in profitability is complemented by a strong net sales figure of ₹115,153.20 crores in the latest quarter, marking a healthy annual growth rate of 14.21% in net sales and an even more impressive 22.69% increase in operating profit.

Return on Capital Employed (ROCE) stands at a commendable 17.1%, underscoring efficient capital utilisation and operational excellence. These metrics collectively affirm HPCL’s robust business model and operational resilience in a volatile oil market environment.

Valuation: Attractive Pricing Relative to Peers

HPCL’s valuation has become increasingly compelling, contributing significantly to the upgrade. The company’s Enterprise Value to Capital Employed ratio is a modest 1.3, indicating a very attractive valuation compared to its historical averages and peer group benchmarks within the oil sector. Despite the stock trading below its 52-week high of ₹508.45, it remains well above its 52-week low of ₹287.55, currently priced at ₹419.50.

Moreover, the stock offers a high dividend yield of 3.7%, enhancing its appeal to income-focused investors. The Price/Earnings to Growth (PEG) ratio is effectively zero, reflecting the company’s strong earnings growth relative to its price, a rare and favourable combination in the mid-cap oil exploration and refining space.

Financial Trend: Sustained Profitability and Market Outperformance

HPCL’s financial trend remains robust, with the company demonstrating consistent growth and profitability over multiple time horizons. Over the past year, the stock has delivered a total return of 21.56%, significantly outperforming the Sensex’s 8.61% return during the same period. Over longer durations, HPCL’s returns have been even more impressive, with a 3-year return of 171.22% versus Sensex’s 37.97%, a 5-year return of 193.38% compared to 72.66%, and a 10-year return of 258.65% against the Sensex’s 234.22%.

This sustained outperformance is supported by a 155.4% increase in profits over the last year, highlighting the company’s ability to convert revenue growth into bottom-line expansion effectively. Institutional investors hold a significant 37.01% stake in HPCL, reflecting strong confidence from sophisticated market participants who typically conduct rigorous fundamental analysis.

Technical Analysis: Shift from Mildly Bearish to Sideways Momentum

The technical outlook for HPCL has improved notably, prompting the upgrade in the technical grade and contributing to the overall rating enhancement. The technical trend has shifted from mildly bearish to sideways, indicating a stabilisation in price movement and a potential base for future upward momentum.

Key technical indicators present a mixed but improving picture. The Moving Average Convergence Divergence (MACD) is mildly bearish on a weekly basis but bullish on a monthly scale, suggesting longer-term positive momentum despite short-term caution. The Relative Strength Index (RSI) shows no clear signal on both weekly and monthly charts, indicating neither overbought nor oversold conditions.

Bollinger Bands reflect a mildly bearish stance weekly but mildly bullish monthly, while the daily moving averages have turned mildly bullish, signalling a potential near-term uptrend. Other indicators such as the Know Sure Thing (KST) and Dow Theory remain mildly bearish weekly, with no clear monthly trend, and On-Balance Volume (OBV) shows no trend weekly but mild bearishness monthly.

Overall, these technical signals suggest that while short-term volatility persists, the stock is stabilising and may be poised for a more sustained recovery, justifying the upgrade in technical grade.

Comparative Industry Position and Market Capitalisation

HPCL operates within the oil exploration and refining industry, a sector characterised by cyclical volatility but also significant long-term growth potential. The company’s market capitalisation grade remains modest at 2, reflecting its mid-cap status and room for growth relative to larger peers. Despite this, HPCL’s consistent financial performance and improving technicals position it favourably within the sector.

Its stock price has shown resilience, closing at ₹419.50 on 27 January 2026, up 1.01% from the previous close of ₹415.30. The stock’s 52-week trading range between ₹287.55 and ₹508.45 highlights both the volatility and the upside potential inherent in the current market environment.

Investment Outlook and Conclusion

The upgrade of Hindustan Petroleum Corporation Ltd. to a Buy rating with a Mojo Score of 74.0 reflects a comprehensive reassessment of its investment merits. The company’s strong financial results, attractive valuation metrics, positive long-term growth trajectory, and stabilising technical indicators collectively underpin this enhanced rating.

Investors seeking exposure to the oil sector with a preference for fundamentally sound and technically improving stocks may find HPCL an appealing candidate. Its high dividend yield, institutional backing, and consistent outperformance relative to the broader market further reinforce its investment case.

While short-term price fluctuations remain a consideration, the overall directional signals suggest that HPCL is well-positioned to deliver value to shareholders in the medium to long term.

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