Shares of Hindustan Petroleum Corporation Ltd declined nearly 3% in early trade on Tuesday, January 20, even after the company announced a long-term liquefied natural gas (LNG) sourcing agreement with a UAE-based supplier.
HPCL shares were trading 2.91% lower at Rs 440 on the NSE, compared with the previous close of Rs 453.20, extending the weakness seen in the previous session.
Why the stock is falling
The decline appears to be driven by near-term market caution ahead of HPCL’s Q3 earnings, which are scheduled to be announced on Wednesday, rather than the strategic LNG announcement itself. The stock had already slipped 0.85% on Monday, indicating some profit-taking ahead of results after a strong run-up.
Details of the LNG agreement
In a regulatory filing dated January 19, HPCL informed exchanges that it has signed a 10-year Sale Purchase Agreement (SPA) with Abu Dhabi Gas Liquefaction Company (ALNG), a subsidiary of ADNOC Gas, to procure LNG on a long-term basis.
Under the agreement, LNG supplies will be received at HPCL’s 5 million tonne per annum LNG storage and regasification terminal at Chhara, Gujarat. The gas will support requirements across HPCL’s refineries, City Gas Distribution (CGD) network, and broader industrial demand, including fertilisers, power, petrochemicals and other sectors.
The company stated that the deal strengthens India–UAE economic ties and reinforces LNG’s role in India’s energy transition strategy.
Why the announcement didn’t lift the stock
While the LNG sourcing agreement improves long-term energy security, the market reaction suggests investors are currently more focused on upcoming quarterly earnings and near-term performance, rather than strategic developments with longer gestation.
HPCL shares have gained nearly 26% over the past one year, which may also have led to short-term profit booking ahead of results.
In summary, pre-results caution and profit-taking, rather than any negative reaction to the LNG agreement, appear to be the key reasons behind the nearly 3% decline in HPCL shares today, even as the company strengthens its long-term fuel sourcing strategy.
