Russia Sanctions Bill: ICICI Securities explains how HPCL, BPCL, IOC earnings could be impacted

Shares of India’s state-run oil refiners, Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL) and Indian Oil Corporation Ltd. (IOC) fell between 0.5% to 1% on Monday, September 21, owing to multiple factors that keep them in focus.

The most important reason being US President Donald Trump having signed the “Lindsey O. Graham Sanctioning Russia and Iran Act 2026” on September 18, which targets Russian oil, banks and shadow-fleet tankers and allows Trump to impose tariffs of up to 100% on major buyers of Russian crude.

However, it must be noted that while there is no direct ban yet and no tariffs have been imposed either, any such potential scenario on Indian exports could pressure India into cutting Russian crude exports, brokerage firm ICICI Securities wrote in its note.

ICICI Securities has also highlighted how the earnings of HPCL, BPCL and IOC could be impacted in its note. It makes these projections assuming a 25% to 50% Russian crude disruption and a replacement cost of $5 to $7 per barrel.

Based on these scenarios, Indian Oil Corporation, who has a 50% exposure to Russian crude, could see its Earnings Per Share (EPS) hit between ₹2.1 to ₹4.2 per share. BPCL, which has a 40% exposure to Russian Crude, could see a ₹2.9 to ₹5.9 per share impact to its EPS, while HPCL, which has a 10% exposure, could see a ₹1 to ₹1.9 per share EPS impact.

Here are some of the important points to look forward to, as highlighted by ICICI Securities in its note:

• Whether these tariffs are actually activated or this is just another leverage tactic.
• What is the scale of the crude displacement – whether partial or complete
• What will be the realized replacement penalty, with ICICI Securities’ base case projecting that figure to be $6 a barrel.
• Whether stronger diesel / jet cracks could offset higher crude price costs?
• A big swing factor will be what will be the government’s fuel-pricing / compensation policy.

Tariffs may never get activated or get waived, widening of Russian crude discounts, cracks may strengthen enough to offset costs, and government intervention potentially altering reported earnings are some downside risks to the ICICI Securities’ thesis, the brokerage said in its note.Shares of HPCL are trading 0.8% lower on Monday at ₹356.1. The stock is down 29% so far this year.Shares of BPCL are trading 0.5% lower on Monday at ₹312.35. The stock is down 18% so far this year.

Shares of Indian Oil are trading at the flat line, looking to recover from the day’s low at ₹136.85. The stock is also down 18% so far year-to-date.