Sharekhan’s research report on Hindustan Petroleum Corporation
Q3FY23 PAT of Rs. 172 crore surprised positively, beating our estimate of a net loss of Rs. 427 crore. This was largely led by strong gross marketing margin as GRM of $9.1/ bbl was below our estimate of $11/bbl. Blended derived gross marketing margins surged 214% q-o-q to Rs. 2,664/tonne; GRM of $9.1/bbl lagged that of BPCL/IOCL at $15.9/$12.9 per barrel. Refinery/pipeline throughput beat estimate at 4.8 mmt/5.8 mmt, up 7.6%/5.6% q-o-q while marketing sales volume of 11.3 mmt (up 8.3% q-o-q) was below our estimate of 11.8 mmt We believe that the earnings downgrade cycle is largely over for OMCs and expect earnings to normalise over FY24-25 led by strength in GRM and likely normalised auto fuel marketing margins. A spike in crude oil prices is a key risk to earnings recovery especially given OMCs inability to hike petrol/diesel price in an inflationary environment.
We maintain a Buy on HPCL with a revised PT of Rs. 265 given inexpensive valuations of 3.4x/0.8x FY24E EPS/BV and FY24E dividend yield of ~10%.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Hindustan Petroleum Corporation - 09 -03 - 2023 - khan