Hindustan Oil Exploration Company Limited

Energy — Oil & Gas E&P · NSE

₹166.00−₹4.12 (−2.42%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of Hindustan Oil Exploration Company Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Hindustan Oil Exploration Company Limited, together with its subsidiaries, engages in the exploration, development, and production of onshore and offshore crude oil and natural gas in India. The company also provides oil field equipment and services.

IndustryOil & Gas E&P

SectorEnergy

Employees117

Annual revenue₹263 Cr

How does it make money?

Turns over ₹263 Cr a year. Of every ₹100 of sales, about ₹24 reaches shareholders as profit, with ₹49 left at the operating level before interest, tax and depreciation. Each of its 117 employees supports ₹2.25 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.25 Cr

Who are its competitors?

The closest listed comparisons in its industry are RELIANCE INDUSTRIES LTD, OIL AND NATURAL GAS CORP., BHARAT PETROLEUM CORP LT, INDIAN OIL CORP LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 4.8% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE15.4%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved -53% while net margin moved -31% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-53%

Margin effect-31%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 22.2% a year
✗ Profit has declined at 31.4% a year
✗ Profit fell 85.8% in the latest year

Quality vs. Valuation

Company Quality

41/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

29/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

87.4x

3Y Median

13.0x

40 monthly readings · mean 14.9x · range 9.7x–36.2x

Sector Median

6.9x

median of 4 sector peers

⚠️Current valuation is approximately 572% above its 3y median of 13.0x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 1172% above the peer median of 6.9x.

vs. its own history

Expensive

13.0x median over 40 months · +572%

vs. sector peers

Expensive

6.9x median of 4 peers · +1172%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

17.1x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 86% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 20.5% to 4.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 17.9% to 4.8% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 3.59x — earnings must service borrowings before shareholders see anything.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 7.4 points, from 56.9% to 49.5%.
🔴Inventory building faster than salesFinancial
Inventory up 386% against revenue up -53% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 8.0x to 4.8x.
🟡Profit is decliningFinancial
Net profit is down 68% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 86% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 56.9% to 49.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 3.59x. Interest is payable whether or not the business has a good year.
The price already assumes success
The stock trades 572% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 20.5% to 4.5%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 47%✓ 49.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹3 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 4.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 4.8x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 3 neutral · 5 weak

Market Cap

₹2,195 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

87.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

1.58x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹1.9

Profitable

Profitable on a per-share basis

ROE

4.5%

Weak

Weak capital efficiency

ROCE

4.8%

Weak

Low return on total capital employed

Debt/Equity

3.59x

High

High leverage

Revenue Growth (YoY)

45.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-85.8%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹3 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

-11.1%

Weak

Thin margins leave little room for error

Net Margin

8.4%

Average

Average bottom-line conversion

Current Ratio

1.10

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.56

Defensive

Steadier than the market

52W Range Position

58%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

171.6 / 169.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

39.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹559 Cr	₹749 Cr	₹421 Cr	₹263 Cr	-22.2%
EBITDA	₹318 Cr	₹324 Cr	₹248 Cr	₹130 Cr	-25.7%
EBITDA Margin	56.9%	43.2%	58.8%	49.5%	—
PAT (Net Profit)	₹194 Cr	₹226 Cr	₹147 Cr	₹63 Cr	-31.4%
EPS	₹14.67	₹17.12	₹11.13	₹4.74	-31.4%
ROE	20.5%	19.3%	11.1%	4.5%	—
ROCE	17.9%	18.3%	10.6%	4.8%	—
Total Debt	₹364 Cr	₹174 Cr	₹121 Cr	₹50 Cr	-48.5%
Free Cash Flow	₹148 Cr	₹104 Cr	₹128 Cr	₹3 Cr	-73.9%

🔴 Revenue has shrunk at 22.2% a year over 3 years.

🔴 EBITDA has shrunk at 25.7% a year over 3 years.

🔴 EBITDA Margin has fallen from 56.9% to 49.5% over 3 years (-7.4 pts).

🔴 PAT (Net Profit) has shrunk at 31.4% a year over 3 years.

🔴 EPS has shrunk at 31.4% a year over 3 years.

🔴 ROE has fallen from 20.5% to 4.5% over 3 years (-16.0 pts).

🔴 ROCE has fallen from 17.9% to 4.8% over 3 years (-13.1 pts).

🟢 Total Debt has shrunk at 48.5% a year over 3 years.

🔴 Free Cash Flow has shrunk at 73.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,171 Cr

Total Liabilities

₹786 Cr

Cash & Equivalents

₹20 Cr

Operating Cash Flow

₹178 Cr

Capex

-₹175 Cr

Shareholding (proxy)

Institutional Holding

1.1%

Insider Holding

41.9%

Corporate Actions

Ex-Dividend Date

23 Aug 2010

Peer Comparison

Company	P/E	ROE
RELIANCE INDUSTRIES LTD	21.9x	8.3%
OIL AND NATURAL GAS CORP.	6.4x	11.7%
BHARAT PETROLEUM CORP LT	7.3x	17.1%
INDIAN OIL CORP LTD	5.3x	15.4%

Recent News

1 mixed1 negative4 general

Hindustan Oil Exploration appoints Debabrata Das as CFO from Oct 16

scanx.trade, 13 Oct

Hindustan Oil Exploration Company shares surge most in six months, here is why

Upstox, 01 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Hindustan Oil Exploration Company Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Hindustan Oil Exploration Company vs Nifty 50: Returns Compared

Univest, 25 Sept

Hindustan Oil Exploration (HINDOILEXP.NS) Eases to ₹174.04, Holds Above Key Support Zone - Strong Buy Stocks

siam.in, 23 Sept

Hindustan Oil Exploration Reports Q1 Revenue Of 1.24B Rupees, Net Profit Falls To 62M Rupees

Sahi, 12 AugResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingBusiness Quality · Financial Health

WeakGrowth · Profitability · Valuation · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — ROCE stays above 8% · see Key things to watch ↑