Bharat Petroleum vs Hindustan Petroleum: A Comparative Analysis of Oil Stocks

All vehicle owners have to fill up their fuel tanks to use the vehicles, but have you ever thought about which petroleum companies have better operations? 

If yes, you’ve come to the right place, as we will compare Bharat Petroleum with Hindustan Petroleum.

Bharat Petroleum Corporation Limited – An Overview

Established in 1952 as a joint venture between the Indian government and Burmah Shell, BPCL became a completely owned government enterprise after the government acquired Burmah Shell in 1976. The company’s activities include petroleum exploration, refining, marketing, distribution, and retail sales. The first drive-through gas station in India opened its doors in 1928. The corporation operates over 18,622 fuel stations nationwide, fueling approximately one crore automobiles daily. This company’s market share is about 22% and is also a Maharatna company.

It is run by the Indian government’s Ministry of Petroleum and Natural Gas. The corporation debuted its emblem on November 18, 1977, and is widely recognized as a golden drop of oil.

Hindustan Petroleum Corporation Limited – An Overview

In 1974, HPCL was established by the merger of Esso Standard and Lube India Limited. It became the first public sector company to list on the Bombay Stock Exchange 1992.

Afterwards, in 1997, HPCL was bestowed the title of a Navratna company. The corporation was granted the title of Maharatna in 2019, and in 2021, it made its most significant profit of 10,644 crore.

Currently, the corporation has a network of 17,000 retail petroleum locations, of which 40% are located in cities and the remainder on highways and rural areas.

Comparative Analysis

We’ll provide you with a comparative analysis of the two petroleum titans based on several characteristics so you can make an informed investment decision before choosing one over the other.

Promoters 

The promoters of BPCL are the Government of India and own 52.98% of equity in it.

The promoter of HPCL is Oil and Natural Gas Corporation (ONGC) which holds about 54.9% stakes.

Refining Capacity

BPCL has a refining capacity of 38.3 MTPA*

HPCL has a refining capacity of 24.5 MTPA*

MTPA – Million Ton Per Annum

Market Capitalization

BPCL – 15.22 Billion Dollar

HPCL – 8.57 Billion Dollar

BPCL has a bigger market capitalization than HPCL, as can be seen from the figures above.

HPCL is a mid-cap stock, whereas BPCL is a large-cap firm that is included in the Nifty 50 index.

(Data as of 13^th Feb 2024)

Share Price

BPCL – 584

HPCL – 502

(Data as of 13^th Feb 2024)

52 Week Low & High

The 52-week low for BPCL was 314 on February 28, 2023, and the 52-week high was 635 on February 8, 2024.

The 52-week low for HPCL was 211 on February 27, 2023, and the 52-week high was 549 on February 14, 2024.

Financial Statement Analysis

Let’s take a look at the company’s finances before going into any further information.

Total Income – While BPCL’s total income is 5,35,651 crores and HPCL’s is 4,68,261 crores, both companies have had year-over-year increases of roughly 24%.

Net Profit – In the fiscal year that concluded on 31 March 2023, HPCL recorded a net loss of 6,980 crores, but BPCL recorded a profit of 2,131 crores within the same time frame.

Total Asset – HPCL’s total asset value is approximately 1,54,485, while BPCL’s total asset value was 1,60,803. While BPCL’s assets fell by 2%, HPCL’s overall assets increased by 2.8%.

Operating Cash Flow – While BPCL’s cash from operating activities remained at 12,446 crores, a 38% decline on a YoY basis, HPCL’s operating cash flow is -3,466 crores, indicating a decrease of 121% year over year.

Key Ratios

To have a better understanding, let us now turn our attention to these oil and marketing firm’s primary rations.

Operating profit margin ratio – A performance ratio shows how much of a company’s earnings come from its operations. Operating profit margins for HPCL and BPCL were -2.54% and 0.26%, respectively.

Inventory turnover ratio describes the frequency with which a business sells and restocks its inventory. The inventory turnover ratio for HPCL is 14.37, whereas the inventory turnover ratio for BPCL was 13.26.

Current ratio describes the relationship between a company’s assets and liabilities. A greater ratio indicates that the organization has more assets than liabilities. HPCL has a current ratio of 0.59, while BPCL has a current ratio of 0.77.

Debt to equity ratio – The leverage ratio, which expresses the whole weight of liabilities and debt relative to total shareholder equity, is another name for it. BPCL had a debt-to-equity ratio of 0.69 while HPCL had a debt-to-equity ratio of 2.33.

Note – Above mentioned data points are as of March 2023.

Read Also: BPCL Case Study: Business Model, Product Portfolio and SWOT Analysis

Conclusion 

Both HPCL and BPCL are strong competitors in the Indian oil marketing sector with robust operations, extensive distribution networks, and government support. But, the nature of government intervention faced by each company is different. 

Although HPCL concentrates more on renewable energy initiatives, you could choose HPCL if you prefer renewable energy more strongly. If you are looking for a larger corporation in terms of financial performance and refining capacity, BPCL might be a better choice.

However, the choice of winner will eventually depend on your investment goals and risk appetite. 

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Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.