Hindustan Petroleum Corporation Ltd. share price target

HPCL’s Q1FY26 standalone EBITDA/PAT of INR 76bn/INR 43.7bn rose 3.6/12.3x YoY (+31/+30%QoQ), vs. I-SecE of INR 82/48.4bn, respectively.

HPCL’s 1QFY26 EBITDA was 9% below our est., led by lower-than-estimated GRM (USD3.1/bbl). GRM, adj. for inventory gains, stood at USD6.5/bbl.

Under-recovery of Rs21.5bn on sale of LPG in Q1FY26 Hindustan Petroleum Corporation (HPCL) reported refining throughput of 6.66mmt during the quarter with a reported GRM of USD3.08/bbl and implied gross marketing margin (GMM) of Rs7/lit (Rs3.0/lit in Q1FY25). Due to better GRM and GMM, standalone EBITDA grew 261% YoY to Rs76bn (Ple Rs89bn, BBGe Rs81bn) but came in lower-than-estimate due to poorer-than-estimated GRM (Ple USD6.2/bbl). We believe GRMs will rebound to the long-term average...

In FY25, gross refining margin reduced to $5.74/bbl from $9.08/bbl in FY24, owing to significant contraction in margin at Vizag, Mumbai and HPCL-Mittal Energy Ltd (HMEL) facilities to $5.63/bbl, $5.92/bbl and $9.27/bbl from $8.12 bbl, $10.35/bbl...

HRRL or Barmer refinery, in which HPCL has 74% stake, has witnessed cost escalation from Rs431bn projected in FY18 to Rs718bn currently. The project with 9mmtpa of refining capacity and 2.4mmtpa of petrochemicals is likely to throw poor ROCE of ~3% due to high depreciation and interest burden thereof. Additionally, Brent appears to be rising, which means gross marketing margins on auto fuels have peaked. Threat of further hike in excise duty on auto fuel also remains. Structurally, the high marketing leverage that HPCL used to enjoy...

HPCL reported better than expected Q4FY25 earnings, with SA EBITDA/PAT of Rs57.3/33.5bn – at a sizable beat, driven by better-than-expected GRMs as well as marketing margins.

Hindustan Petroleum Corporation (HPCL) reported better-than-expected Q4 results with standalone EBITDA of Rs58bn (up 20.8% YoY; PLe: Rs35.6bn, BBGe:Rs40.5bn) and PAT of Rs33.5bn (up 18% YoY; PLe: Rs10.8bn, BBGe: Rs16.8bn). On the refining front, GRM came in at USD8.5/bbl. GMM stood at Rs4.6/lit, and under-recovery on sale of LPG stood at Rs33bn. The stock is trading at 1.3x FY27 P/BV. In Q1-TD, Singapore GRM has remains at USD3.6/bbl, with strength in past few days. Average marketing margins on petrol/ diesel...

HPCL’s reported 3QFY25 financial performance was significantly above our estimates, as weaker-than-expected marketing margin performance was overpowered by robust refining margins and marketing sale volumes.

HPCL reported better than expected Q3FY25 earnings with EBITDA/PAT of Rs64.5/30.2bn, a 10%/19% beat, driven by better-than-expected GRMs and marketing volumes.

HPCL’s Rajasthan Refinery (HRRL) is set to start operations in FY26 and will add ~30% to HPCL’s refining capacity. At peak capacity utilization (likely in FY28), HRRL will contribute ~37% to HPCL’s FY26E EBITDA.

Q1 results was below consensus. However, underlying margins show benefit of progress at Vizag and healthy fuel margins

HPCL’s Q1FY25 SA EBITDA was 27% lower than expected, at Rs21.1bn, mainly due to lower marketing margins (LPG under-recoveries of Rs24bn), and partly offset by higher reported GRM at US$5/bbl vs our estimate of US$4/bbl.

HPCL’s Q4FY24 SA EBITDA was 11% lower than expected at Rs48.7bn, mainly
due to lower cracks & discounts, MR shutdown, and intermediate stock generation impact (USD1-1.5/bbl), as reported GRM was USD7/bbl vs our
estimate of USD13.5/bbl.

Q4FY24E may exceed our estimates for HPCL, driven by stronger GRM guidance and better-than-expected marketing margins; however, macros have changed dramatically. Crude prices have spiked to USD 90/bbl+, with price reduction of INR 2/ltr in petrol/diesel in mid-Mar’24, which can keep retail fuel margins subdued over the next 3 months.

Hindustan Petroleum’s (HPCL) recurring standalone EBITDA / PAT for Q2FY24 of INR 82.2bn / INR 51.2bn was down 5%/6% QoQ (Q2FY23 saw huge losses for HPCL) vs our estimates of INR 63bn/36bn, respectively. YoY improvement was driven by higher refining throughput, strong marketing volumes and stronger marketing margin (retail margin of INR 2.9/ltr vs loss of INR 3.7ltr in Q2FY23).