Net revenue for Q2FY21 declined 14.9% YoY on account of subdued recovery post lockdown relaxations. However, Gross Refinery Margins improved to US$ 5.1/bbl (vs US$ 2.8/bbl in Q2FY20) driven by...

We maintain Buy on HPCL with our revised target price (TP) of Rs354, using 6.5x PE after marginal increase in our consolidated Sept'22E EPS. HPCL looks the best OMC pick as the management has convinced us that it is functioning more as a board-led company and explained the economics and market rationale for its Rs25bn buyback ofs up to 10mm shares at a price capped at Rs250. This is not difficult for HPCL to finance given its comfortable cashflows and leverage as of Sept'20. On fundamentals, HPCL said that refining is above breakeven and is likely to see higher margins due to capacity closure in the EU. The 55% beat in 2QFY21 PAT was driven by higher marketing inventory and fx gains. Maintain Buy as our Top OMC pick. Risk...

Refining margins were weak, in line with global trends: HPCL's refining margins for Q2 came in at US$5.1/bbl (Q1FY21 at US$0.04/bbl) and included inventory gains of US$2.4/bbl. For Q2, refining throughput was higher at...

Q2FY21 PAT at Rs. 2,477 crore (up 2.4x y-o-y) substantially beat street estimates led by large inventory gains of Rs. 1,780 crore and beat in core GRM at $2.7/bbl. However, earnings missed our estimate due to lower marketing margins. HPCL outperformed peers with strong core GRM of $2.7/bbl vs. $1.5/bbl for BPCL and negative $1/bbl for IOCL; refinery utilization of 103% (vs. 79.5%/82% for IOCL/BPCL). Board approved share buyback not exceeding Rs. 2,500 crore at maximum buyback price of Rs. 250/share (34% premium to closing price of Rs. 187 on November 04, 2020) from open market. Buyback and healthy dividend yield of ~8% to support stock prices....

HPCL has announced a Buy Back scheme for an aggregate amount not exceeding INR 2,500 crores offering at a price not exceeding INR 250 per share. The buyback will in the form of open market transaction through stock exchange mechanism i.e. using the electronic trading facilities of the stock exchanges where the equity shares of the Company are listed. The indicative maximum number of Equity Shares proposed to be bought back at the Maximum...

HPCL's Q2FY21 earnings remained robust at Rs 24.7bn (+2.4x YoY).

Reported GRMs during the quarter were at zero, lower than our estimate of US$3.8/bbl. Core GRMs were weak at -US$0.9/bbl while inventory loss was at US$0.9/bbl. Benchmark Singapore GRMs are currently at very low levels and marginal recovery was witnessed recently. Improvement in petrol & diesel spreads will be important for stable GRMs. We estimate GRMs at...

NBIE Values your patronage- Vote for The Team in the Asia Money poll 2020. Click Here We maintain Buy on HPCL with a target price (TP) of Rs343, which we have arrived at based on 7x PE on our unchanged consolidated FY22E EPS. The standalone 1QFY21 results were a massive beat vs. our estimates. The adjusted PAT came in at Rs28.2bn vs our estimate of Rs14.8bn and 3.5x the PAT reported in 1QFY20. The beat was due to Gross/EBITDA margins coming in 181bps/352bps above our forecast, driven by robust unit EBITDA margin on marketing volume ~ Rs6351/te, as per our proforma analysis....

We maintain our FY21/22 earnings estimates. During Q1FY21, core standalone EBIDTA adjusted for inventory gains was healthy at Rs37.2bn (+71%YoY) despite lower refining margins ($0.04/bbl vs $0.75/bbl in Q1FY20). Weak global demand and high inventory levels to likely keep crude oil prices...

HPCL reported net revenue of Rs. 66,155cr in Q4FY20, a fall of 2.6% YoY due to drop in crude oil prices during the quarter. The crude throughput fell 1.3% YoY to 4.54mmt (+9.1% QoQ) at Mumbai and Visakh refineries. However, pipeline throughput went up 2.0% YoY to 5.72mmt. Domestic sales volumes fell 7.8% YoY to 9.25mmt due to weaker transportation fuel demand and contraction in economic activities amidst COVID-19 lockdown throughout the nation. Oil prices impacted the margins Gross refining margins (GRM) for the quarter contracted to USD -1.23/bbl (vs....

A sharp reduction in oil demand owing to Covid-19 outbreak resulted in a significant drop in crude oil prices. As a result, average Brent crude oil prices declined by US$12/bbl QoQ to US$50.6/bbl with closing Brent price at US$21.5/bbl. On account of the same, the company reported marketing inventory loss of | 1529 crore. However, core marketing margins were relatively steady during the quarter. Marketing sales de-grew 7.8% YoY to 9.3 MMT mainly due to a decline in diesel sales. Going forward, we expect marketing sales volumes at 37.4 MMT & 42.2 MMT in FY21E and FY22E,...

We maintain Buy on HPCL with a target price (TP) of Rs343 (+60.3% to CMP), which we have arrived at based on 7x PE on our reduced FY22E EPS (based on past average). This follows our earnings revision - cutting FY21E/FY22E earnings by 54.5%/21.9% post the 4QFY20 results call with HPCL management. The standalone 4QFY20 results were a beat vs. our estimates - adjusted PAT of Rs10.3bn vs our estimate of loss at Rs27mn. The beat was due to a steep tax write back of Rs15.48bn. The reported PAT came in at Rs268mn after exceptional loss of Rs10.03bn attributed to the impact of lockdown on inventory valuation. Reported GRM came in at minus US$0.1.23bbl, including refining inventory loss of Rs25.84bn vs. NBIE estimate of minus...

HPCL's Q4FY20 PAT was battered by Rs 41bn in inventory losses.

Blended marketing margin rose 16% qoq to Rs5.7/kg, a 7% miss. Domestic/total sales volumes declined 8%/5% yoy, with petrol/diesel down 3%/9%. Gross debt rose 58% yoy/50% qoq to Rs430.2bn. Core EPS for Q4 stood strong at Rs11.9, a 30%+ beat. We raise FY21/22E EPS by 1%/9% due to low taxes/higher marketing margins, offsetting volume declines. We cut TP by 13% to Rs280, assuming higher debt. We reiterate Buy and OW stance in EAP. We remain positive on OMCs and HPCL is our top pick. Result highlights: Opex was broadly in line, with employee cost having Rs697mn provision due to PF trust investment diminution, while Other Expenditure was down 6% yoy/3% qoq....

17 June 2020 Reported EBITDA stood at INR0.7b; while EBITDA adj. for inventory stood at INR41.8b (v/s est. Thus, core GRM stood at USD9.6/bbl, with inventory loss of USD10.8/bbl. HPCL recorded an exceptional item of INR10b on account of the downward revaluation of inventories due to the COVID-19 impact. USD4.2/bbl of inventory loss (resulting in adj. The company has re-measured its DTL benefits and has thus written back tax of INR15.

We tweak our FY21/22 earnings estimates. In FY20, core EBIDTA adjusted for inventory and forex loss was stable at Rs103bn (-4%YoY vis--vis -55%YoY reported) despite lower refining margins ($1.0/bbl vs $5.0/bbl in FY19). Sharp drop in crude oil prices dragged down reported FY20 PAT, however, with its recovering part of the losses will be reversed. Benign crude oil prices to likely support marketing margins in medium term, whereas lower operating cost to...

HPCL to lead tactical rally in OMCs despite refining woes We maintain Buy on IOC and upgrade BPCL and HPCL from Accumulate to Buy following revised earnings and TP, which we have rolled over to FY22E. We see PSU refining majors (OMCs) delivering double-digit returns in the next 6-12 months based on the upside leverage to marketing margins under low oil prices below US$40-50/bbl. We believe that these stocks are poised to enter the blue sky phase last seen during FY14-17, when the steep fall in oil price from US$107 to US$47-50/bbl boosted marketing margins and earnings for the OMCs. As a result, IOC and BPCL delivered compounded returns of 39% and 40%, respectively while HPCL's stock price witnessed a CAGR of...

Crude prices witnessed a sharp decline in March due to spread of Covid-19 across the globe and Opec deal failure. A likely increase in oil output by both Saudi Arabia and Russia from Q1FY21E and lower demand are expected to lead to a sizeable oversupply in the oil market. Subsequent low oil prices are expected to significantly affect ONGC's profitability....

We expect company's earnings to grow at healthy 21.8% CAGR over FY20-22E supported by ongoing capacity expansion and expected improvements in GRMs and reiterate our BUY rating on the stock, with a revised TP of Rs. 289 based on SOTP. Topline improves sequentially, but declines YoY In Q3FY20, Revenue grew 16.2% QoQ to Rs. 70,750cr but declined 1.9% YoY owing to drop in crude throughput. The planned shut downs at Visakh refinery due to BS-VI upgradation resulted in decline in throughput to 4.16mmt (8.8% YoY). Pipeline...

HPCL is doubling its existing capacity at Visakh from 8.3mmtpa to 15mmtpa by FY21E (outlay Rs. 210bn) and increasing it from the current 7.5mmtpa to 9.5mmtpa (outlay Rs 50bn) at Mumbai. This will drive the earnings for its refinery business. We remain constructive on HPCL in a falling crude price scenario as it will (1) Reduce Govt's intervention in auto fuel pricing, (2) Reduce working capital, (3) Put subsidy burden overhang to rest. Our SOTP target is Rs 315 (6x Dec 21E EV/e for standalone refining and pipeline, 7x EV/e for marketing and Rs 51/sh from other investments) vs the consensus TP of Rs 340/sh. HPCL reported an in-line revenue/gross profit in Q3. However, EBITDA/PAT were below our estimates by 18.2/26.1% owing to higher operating expenses. We maintain BUY given the impending 55% increase in refining capacity and stable marketing margins.