BPCL vs HPCL vs IOCL – Analysis of Oil Marketing Companies in India

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Comparative Analysis of Oil Marketing Companies – BPCL vs HPCL vs IoCL | Impact of COVID-19 on Oil Marketing Companies


During this blog post, we will look at oil marketing companies in India in comparison. The Government of India plans to divest its stakes in these companies, which has recently brought these companies to the front pages of the media.  Additionally, because of this news, they are attracting a large amount of retail investor interest.

Comparison of Oil Marketing Companies Shares

Bharat Petroleum Corporation Limited (BPCL)

  • It has headquarters in Mumbai, Maharashtra and incorporated in 1952.
  • The corporation operates two large refineries of the country located in Mumbai and Kochi.
  • Having a market share of 22% in domestic sales volume, it is the second largest oil marketing company in India.
  • Also, it is the third largest in terms of refining capacity in India (15.33% of India’s refining capacity).

Hindustan Petroleum Corporation Limited (HPCL)

  • HPCL is an Indian oil and natural gas company incorporated in 1952 as Standard Vacuum Refining Company.
  • It has its headquarters in Mumbai and was renamed as ESSO India later. HPCL is basically a merger of ESSO India and Lube India in 1974.
  • HPCL share price dividend is 25% market-share in India among public-sector companies and a strong marketing infrastructure. It has the second largest market share in product pipelines in India.

Indian Oil Corporation Limited (IOCL)

  • IOCL, incorporated in 1959 and it is an Indian state-owned oil and gas company .
  • It is the largest commercial oil company in the country with a market share of 32% in domestic refining capacity.
  • IOCL Market shares – 51% in Crude & Product Pipeline , 42% in Petroleum and oil lubricants.

All these oil marketing companies are Government of India controlled “Maharatna Companies” and are engaged in refining crude oil & marketing of petroleum products.

Let’s have a look at the comparative analysis of these indian oil brands on the following parameters.

1. Shareholding Pattern as on June’20

Shareholding Pattern of Oil Marketing companies as on June’20

  • As it is evident from the share holding pattern, retailers favour Indian Oil Company Limited (IOCL).
  • Currently, Government of India is interested in selling its entire stake in BPCL and it will trade on exchange as a private entity.

2. Market Valuation

Oil Marketing companies Market Valuation

  • As we can see, BPCL’s market cap, share price history and PE have increased mainly as the Government of India is looking forward to divesting its stake in BPCL.
  • This is evident from the company’s historical median PE, as the current PE is ~40% higher than the hisorical median PE.

3. Ratio Analysis

Oil Marketing Companies Ratio Analysis

  • Oil refining is a very capital intensive sector, hence it is important to look at return ratios like RoCE and RoE of BPCL HPCL and IOCL
  • As seen, BPCL has better return ratios (RoCE and RoE) as compared to its peers and hence justifies its premium valuation to a certain extent.
  • All the three companies have higher debt to equity ratios because of the capital intensive nature of the sector.
  • However,HPCL vs BPCL, both look good in terms of interest coverage ratio. Usually an interest coverage ratio above 2.5 x is preferable.
  • Being PSU companies, dividend yield is better as compared to private companies.

4. Sales Growth

Oil Marketing Companies Sales growth

  • Overall the sales growth of companies is flat over the years (3,5 and 10). Also , the revenues were hit badly this year due to COVID-19 pandemic.
  • One of the reasons for muted growth can be changing consumer preferences for alternative energy resources as compared to conventional sources. Also the increasing traction of electric vehicles will augur this shift in changing preferences.

5. Net Profit Growth

Oil Marketing Companies Net Profit growth

  • On the profitability front, BPCL HPCL IOCL, all three companies have muted profit growth at least for a 3 year period and on TTM basis.
  • There are many profitability challenges mainly due to the government intervention in pricing and taxes charged.

6. Refining Market Share (FY20)

Oil Marketing Companies Refining Market Share

  • Here, IOCL is the leader in refining followed by Reliance Industries.

7. Product Sales (MMT)

Oil Marketing Companies Product Sales (MMT)

  • In the current quarter, product sales declined, but before this quarter, they were growing.

8. Gross Refining Margins (GRM) (US$/bbl)

Oil Marketing Companies Gross Refining Margins (US$ / bbl)

  • Gross Refining margin is (Value of Output Petroleum Products from oil refinery – Price of Raw Material i.e. Crude Oil). It is calculated on a per barrel basis.
  • As seen, for the last 2 quarters, the margins are very low mainly because of the pandemic.
  • However ,till Q3FY20, all companies had stable margins in the range of 0.8% – 4.7%.
  • A refiner’s gross margin depends on two major factors – the value of the final output products and the value of the fuel losses.
  • Thus, if the refinery produces high value products and has less spillage/ wastage, its GRM is higher.

Notes: –

  • We have only presented an analysis and in no way recommending any company.
  • One should invest in these companies after considering their individual risk profile.

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