Why Does Morgan Stanley Call HPCL Its Top Refinery Pick for FY26?
Morgan Stanley has reaffirmed its Overweight stance on Hindustan Petroleum Corporation Ltd (HPCL) with a target price of ₹533, citing resilient refining margins and strong operational performance. The brokerage continues to view HPCL as its top pick among Indian refiners, underlining a “golden age” phase for downstream companies.
According to the report, MRPL’s gross refining margin (GRM) came in strong at US$8.6 per barrel versus the benchmark average of US$4/bbl. The key driver was the continued import of discounted Russian crude, which constituted nearly 35–40% of HPCL’s crude mix, offering cost advantages over global peers.
For options traders tracking energy counters, understanding global crude trends can help anticipate sector swings. To hedge or trade such directional movements effectively, explore our Nifty Put Option Tip built for downside protection and tactical positioning in volatile sessions.
HPCL’s capex plan for FY26 stands at ₹1,500 crore, with a focus on refining upgrades and expanding its retail network by adding 250 new outlets by year-end. So far, 18 outlets have been commissioned in Q2FY26, supporting its distribution-led growth strategy.
Morgan Stanley noted that MRPL’s strong results point to upside risks for HPCL’s earnings outlook. With refining spreads remaining well above mid-cycle levels, HPCL’s earnings are expected to outperform peers. The brokerage also highlighted the benefit of monetizing ongoing capex investments and hardware upgrades over the next 12 months.
The report added that tight global supply conditions and limited new refining capacity are likely to sustain elevated GRMs in the medium term. HPCL’s integration with upstream and retail assets provides better stability across cycles compared to standalone refiners.
Traders looking for momentum setups in energy sector indices can capitalize on sectoral rallies driven by oil price stability and strong refining margins. Track intraday shifts using our BankNifty Call Option Tip for actionable insights aligned with commodity-linked index movement.
Morgan Stanley continues to prefer HPCL over BPCL, citing better earnings visibility, capex execution, and demand recovery in urban and rural markets. The brokerage expects steady retail margins and continued GRM support to drive outperformance in FY26–27.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that HPCL’s cost advantage from Russian crude imports and robust refining spreads position it as a strong structural story in the oil value chain. Investors can consider partial accumulation on dips. For expert trading and investment ideas, visit Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries
- Why Does Morgan Stanley Prefer HPCL Over BPCL?
- How Do Discounted Russian Crude Imports Impact Refining Margins?
- Can GRMs Stay Elevated Through FY26–27?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
