Hindustan Petroleum Corporation Ltd. share price target

Hindustan Petroleum Corporation's (HPCL) Q1FY19 results were above our estimates on the profitability front mainly on account of higher inventory gains despite a weak operational performance. The...

Our SOTP target is Rs 463 (5x Jun 20E EV/e for standalone refining, 8x EV/e for marketing, 9x for pipeline and Rs 159/sh from other investments). Maintain BUY. HPCLs 1QFY19 EBITDA came in at Rs 31.91bn, up 96% YoY owing to 22% increase in GRM to USD 7.15/bbl (including inventory gains of USD 3.47/bbl). Marketing volumes were up 5% YoY while gross marketing margins were down 9.4% YoY to Rs 3.61/ltr. PAT stood at Rs 17.19bn up 86% YoY on lower other income at Rs 3.06bn (-46.4% YoY) and higher interest cost at Rs 1.91/bn (+33.5% YoY).

ICICI Securities Ltd | Retail Equity Research Oil Refining and Marketing Companies Volatile operational factors create uncertainty Brent crude oil prices witnessed an upward trajectory in the past two quarters and are currently at high levels of US$77/bbl. More recently, crude oil prices have seen sharp fluctuations in the range of US$70-80/bbl. In addition, depreciation of the rupee has also been a concern. The consequent high petrol and diesel prices resulting in uncertainty over oil marketing...

Although refining margin is expected to remain firm, fears on the ability of OMCs to hike prices in a rising crude oil price environment remains a concern. Hence, we continue to maintain HOLD rating to the stock with a TP of Rs 341 (SOTP). Increased sales volume boosts revenue Despite flat crude oil throughput of 4.63mmt on YoY basis, HPCL reported 18% YoY increase in net sales in Q4FY18 primarily on account of increased sales volume and higher average crude oil price. During Q4FY18, HPCL recorded 7.2% YoY increase in domestic sales volume to 9.39 MMT. The sales of motor spirit (petrol) rose by 12.8% YoY while high...

Our SOTP target is Rs 458 (5x Mar 20E EV/e for standalone refining, 8x EV/e for marketing, 9x for pipeline and Rs 158/sh from other investments). Maintain BUY. HPCLs 4QFY18 EBITDA came in at Rs 29.23bn, down 7.5% QoQ owing to 22% decline in GRM to USD 7/bbl and higher opex, up 20% to Rs 33.5bn due to higher repair and maintenance cost. Gross marketing margins were up 50% QoQ to Rs 4.2/ltr. PAT stood at Rs 17.48bn down 10% QoQ on lower other income at Rs 3.43bn (-27.8%).

HPCL sales rose 18% to Rs 60810.07 crore for the quarter ended March 2018 compared to corresponding previous year period. This included subsidy from the government of Rs 231.34 crore down by 27% on a y-o-y basis. Excluding compensation from the government net sales of...

ICICI Securities Ltd | Retail Equity Research Hindustan Petroleum Corporation's (HPCL) Q4FY18 results were above our estimates on the profitability front mainly on account of a better operational performance. The topline increased 5.7% QoQ to | 66641 crore (our estimate: | 67847.7 crore) HPCL achieved crude throughput of 4.6 MMT in Q4FY18, slightly above our estimates. GRMs were strong at US$7.1/bbl above our expectation of US$6.5/bbl. Inventory gains during the quarter came...

Marketing margin improved significantly sequentially, erodes concern HPCL's marketing margin on petrol/diesel improved significantly on a QoQ basis, which diminishes concern of losses. Our calculations suggests, average marketing margin on petroleum products improved to Rs1.99/ltr in Q4FY18 from Rs0.74/ltr in...

22 May 2018 4QFY18 Results Update | Sector: Oil & Gas HPCLs reported EBITDA of INR29.2b (+1% YoY, -7% QoQ) in 4QFY18 was slightly higher than our estimate of INR27.8b. However, EBITDA adjusted for inventory gains stood at INR27.7b (-2% YoY, +64% QoQ), significantly above our estimate of INR22.4b, primarily led by higher GRM and lower inventory gains. Refining throughput grew 2% QoQ (flat YoY) to 4.6mmt. Core GRM stood at USD6.74/bbl and refining throughput at 18.3mmt, implying 116% utilization. OMCs have seen a sharp correction in the recent past due to fear of price cap on auto fuel in the light of upcoming elections and rising crude oil price. OMCs have seen a sharp correction in the recent past due to fear of price cap on auto fuel in the light of upcoming elections and rising crude oil price.

According to media reports, the government may ask state oil marketing companies to absorb a hike of up to | 1 per litre on petrol and diesel retail prices. Brent crude oil prices have witnessed an upward trajectory in the past two quarters and are currently at a four-year high of US$71/bbl. This has led to the escalation of petroleum product prices, especially petrol and diesel. If there is any limit on passing on fuel price hikes to consumers, the oil marketing companies (OMCs) would have to bear a notable burden on their profitability. However, some reports also indicate that OMCs have not...