1. At a Glance
If corporate life had a soap opera,Hindustan Oil Exploration Company Ltd (HOEC)would be the overachiever who just can’t catch a break. Despite pumping gas, oil, and adrenaline since1983, this ₹1,907 croresmallcap exploration drama refuses to go unnoticed. The stock is currently lounging at₹144, down almost-15% in 3 months— clearly, the oil isn’t the only thing under pressure.
The Q2 FY26 results came in hot and cold at the same time:Sales jumped 232% YoY to ₹315 crore, butPAT fell 74%to a measly ₹2.83 crore. Imagine working double shifts and still being broke by payday — that’s HOEC this quarter. The company’sROE is 11.8%andROCE 12.3%, both decent enough to remind us it’s not a complete disaster, just… complicated.
Debt? Only ₹76.9 crore — basically pocket change for an energy company. But dividends?0%.Apparently, HOEC believes in emotional returns, not financial ones. EPS stands at₹10.7, giving it aP/E of 17.4x, roughly equal to the industry average.
If Q2 was a movie, it’d be called“The Curious Case of Exploding Revenue and Vanishing Profit.”So yes, buckle up — this is going to be one spicy investigation.
2. Introduction
Let’s start with a confession: most oil & gas explorers in India live between two extremes — either they gush profits like ONGC or leak patience like Selan Exploration. HOEC, of course, sits right in the middle: part adventurer, part philosopher.
Founded in 1983 (when petrol was under ₹10), HOEC became India’sfirst private oil & gas explorer— a brave move in a PSU-dominated jungle. Fast-forward 40 years, and it’s still searching for the perfect gush of fortune.
The company operates acrossTamil Nadu, Maharashtra, Gujarat, Assam, and Arunachal Pradesh, both onshore and offshore. Translation: it drills wherever it smells hydrocarbons — or opportunity.
Now, while most people think oil exploration is all about “black gold,” in HOEC’s case, it’s also aboutbureaucratic endurance and environmental clearances. Every time they find a new well, they also discover new paperwork.
But here’s the kicker — HOEC actually has asolid portfolio of 10 producing oil & gas blocksand1 exploratory block, spread across4 of India’s 7 producing basins. The kind of diversification mutual fund managers dream of, except the returns smell more like diesel than dividends.
And while big boys like ONGC and Oil India wrestle with geopolitics, HOEC’s problems are more, shall we say,domestic: wax-clogged pipelines, delayed clearances, and the occasional “oops” in quarterly profits.
So how does this indie explorer stay afloat in a sea of fossil fuel giants? Let’s pop open the barrel and find out.
3. Business Model – WTF Do They Even Do?
In one line: HOECfinds oil and gas,sells it to GAIL and refiners, andoccasionally prays to the geology gods.
But unlike some flashy conglomerates that diversify into biscuits and broadband, HOEC sticks to what it knows — energy exploration and production. Here’s the breakdown:
- Natural Gas (84% of revenue)– Mostly from PY-1 and Dirok fields. Think of this as the breadwinner of the family.
- Crude Oil (16% of revenue)– The more glamorous sibling, but moody. One bad quarter and it sulks for a year.
Its operations span multiple blocks:
- PY-1 (100% stake)– Offshore Tamil Nadu. Runs like that one reliable cousin who never complains. Contract extended till 2030.
- Dirok (27% stake)– Assam. Joint venture with Oil India and IOC. Production capacity of ~50 mmscfd but throttled because, well, demand issues. (Yes, even gas gets ghosted.)
- Cambay Fields (25% stake)– In Gujarat, producing ~150 BOEPD but aiming for 300 BOEPD post artificial lift upgrades.
- B-80 (60% stake)– JV with Adbhoot Estates. Produced first crude in Jan 2024. Big hope, small patience.
- Kharsang (35% stake)– Arunachal Pradesh. 9 new wells planned, 9 more waiting in the queue.
- Greater Dirok & Umatara– Still in pre-production phase. The suspense continues.
HOEC’s charm lies in itslow-risk strategy— it prefers discovered fields over wildcat exploration. It’s like dating only people your friends have already approved of.
Yet, for all this geological discipline, the company’s revenue depends on global crude prices, government policies, and weather tantrums. Welcome to the oil business — where one cyclone can do more damage than a CFO resignation.
4. Financials Overview
| Metric | Latest Qtr (Q2 FY26) | YoY Qtr (Q2 FY25) | Prev Qtr (Q1 FY26) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 315.0 | 94.8 | 78.7 | 232% | 300% |
| EBITDA (₹ Cr) | 22.8 | 31.7 | 32.2 | -28% | -29% |
| PAT (₹ Cr) | 2.83 | 10.81 | 43.9 | -74% | -93% |
| EPS (₹) | 0.21 | 0.82 | 3.32 | -74% | -94% |
Oh boy. That’s not a table — that’s a rollercoaster chart. Revenue skyrocketed, but profits fell harder than an oil rig in a storm. The culprit? Rising costs and a dramatic fall in operating margins from 40.9% to just 7.2%.
It’s like throwing a party for 300 people and realizing you forgot to charge an entry fee.
5. Valuation Discussion – Fair Value Range Only
Let’s crunch numbers like a caffeine-addled analyst.
- EPS (TTM)= ₹10.7
- Current P/E= 17.4x
- Industry P/E= 17.4x (how poetic)
If HOEC maintains its FY25 profit momentum (₹141 Cr), fair value based onP/E = 15–20x→Fair Value Range = ₹160 – ₹214 per share
Now, onEV/EBITDA basis:
- EV = ₹1,909 Cr
- EBITDA (FY25) = ₹200 Cr (approx from TTM)
- EV/EBITDA = 9.5x
Peers like Oil India trade at 4–6x, ONGC at 3–5x. So HOEC’s premium seems more hope than substance. On a fair 6–8x range, EV-based value = ₹1,200–₹1,600 Cr → ₹90–₹120 per share.
DCF Estimate (simplified):Assuming ₹150 Cr annual FCF growing 5% for 5 years, discount at 12%, terminal 2% → Value ≈ ₹170–₹200 per share.
🎯Educational Fair Value Range: ₹120 – ₹200/share(For learning purposes only. Not investment advice.)
6. What’s Cooking – News, Triggers, Drama
November 2025 was action-packed:
- Revenue ₹315 Cr, Net Profit ₹2.83 Cr– a quarter that screamed“don’t get too excited.”
- Full 100% ownership of Block B-80acquired in FY26 Q1. Exceptional gain of ₹32.5 Cr from the deal.
- KSG-71 welldrilled in Kharsang Block, producing250 barrels/day— the first in 12 years. That’s basically oil’s comeback tour.
- Awarded a new Mumbai Offshore blockin April 2025. (Because HOEC can’t resist adding more acreage to its exploration addiction.)
- Credit rating outlookrevised toPositivein 2024.
- GST penaltyof ₹14.9 lakh — pocket change but enough to make accountants sigh dramatically.
The company’s capex plan? ₹1,000 crore till FY27, with ₹300 crore annual spend. Apparently, oil isn’t the only thing flowing freely.
Triggers ahead: ramp-up from Kharsang, restart of B-80 production post-weather disruptions, and the Dirok workovers. But let’s be honest — in the oil business, “trigger” often means “pending environmental clearance.”
7. Balance Sheet
| (₹ Cr) | Mar 2023 | Mar 2024 | Sep 2025 (Latest) |
|---|---|---|---|
| Total Assets | 1,850 | 1,951 | 2,087 |
| Net Worth (Equity + Reserves) | 947 | 1,174 | 1,368 |
| Borrowings | 364 | 174 | 77 |
| Other Liabilities | 539 | 603 | 642 |
| Total Liabilities | 1,850 | 1,951 | 2,087 |
