Hindustan Petroleum Corporation Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Hindustan Petroleum Corporation's (HPCL) Q2FY17 results were below our estimates. Topline declined 7.4% QoQ to | 47822.5 crore, marginally lower than our estimate of | 52148.2 crore EBITDA at | 1260.9 crore was lower than our estimated EBITDA of | 1850 crore primarily due to lower-than-expected GRMs of US$3.2/bbl (inventory loss of $1/bbl) against our expectation of US$4.7/bbl. HPCL achieved crude throughput of 4 MMT in Q2FY17...

India’s domestic petroleum consumption growth will be 4-5x the world average, and is expected to grow at ~5% over the coming decade. However, the mix is expected to change in favor of gas (current share at ~7% v/s world average of ~24%) and clean energy sources. Indian petroleum consumption will be supported by (a) rising affluence and urbanization, (b) massive potential in end-market growth, (c) young, vibrant and upwardly mobile working class and (d) stable and pro-development government. Supportive macroeconomic trends that will drive energy demand and mix include: (a) improving GDP – more freight movement, (b) increasing disposable income, (c) thrust on clean energy sources and (d) demographic change with a higher share of working age population.

Valuation : Pure play petroleum marketing companies - US based CST Brands (CST US; M Cap: USD3.6b) and New Zealand based Z Energy (ZEL NZ; M Cap: USD2b) trade at >10x EV/EBITDA. These valuations (in-line with the underlying business dynamics) are more similar to consumer business than refining or oil & gas. They value HPCL (on FY18E) at 5x for refining and 7.5x for marketing to arrive at a fair value of INR1,490 implying a 19% upside. HPCL trades at 8.8x FY18E standalone EPS and 7x FY18E consolidated EPS of INR175. Maintain Buy.

HPCL reported a strong result in Q1FY17 on the back of higher adventitious and inventory gain supported by higher crude throughput & product sales volume. The company's revenue declined 12.9% YoY to Rs448 bn (below IDBIest) while EBITDA increased 17% YoY to Rs36.3 bn (+36% QoQ) and net profit grew 30% YoY to Rs21 bn, beats expectation. Crude throughput increased 20% YoY to 4.5mmt (-4.7% QoQ) while sales volume increased 4% to 8.9mmt (-1.4% QoQ). GRM came at US$6.8/bbl in Q1FY17, down from US$8.6/bbl in Q1FY16 (IDBIest US$7.1/bbl) which includes US$2/bbl of inventory gain. Also, the company's adventitious gain from marketing business came at nearly Rs10 bn which boosted profits. Total under-recoveries came at Rs3.3 bn which was fully...

HPCL’s reported strong results in 1QFY17 led by the inventory gains of ~Rs 11bn. EBITDA was Rs 36bn and RPAT was Rs 21bn. Results are not comparable owing to inventory, forex and under-recovery impacts.Growth in FY17 may be challenging considering the higher base and muted GRM trend. The benefits of lower crude prices (balance sheet healing and lower interest cost) are mostly priced in. Expansion in marketing margins is the only trigger left. We are positive on HPCL owing to a structural uptrend in marketing segment. The stock has moved up by ~80% over the past 6-months. We see a correction in near term (better entry point) led by the weakness in GRM and no further inventory gains.

Their SOTP target is Rs 1,350 (4x FY18E EV/e for standalone refining, 6.5x EV/e for marketing and Rs 255/sh from other investments). Maintain BUY.

ICICI Securities Ltd | Retail Equity Research Hindustan Petroleum Corporation's (HPCL) Q1FY17 results were above our estimates. The topline increased 22.4% QoQ to | 51661 crore, higher than our estimate of | 46299.6 crore. However, revenues were largely in line with our estimates, adjusting for change in accounting method due to Ind-AS EBITDA at | 3626.8 crore was higher than our estimated EBITDA of | 2394.5 crore due to inventory gain of | 1100 crore and higher-thanexpected GRMs of US$6.8/bbl against our expectation of US$6.3/bbl....

Hindustan Petroleum Corporation Ltd. (HPCL) is a Government of India Enterprise with a Navratna Status, and a Forbes 2000 and Global Fortune 500 company. It has two business segments which are engaged in refining, marketing and transportation of petroleum products, and Exploration & Production of Hydrocarbons. It owns and operates two refineries, which produce a range of petroleum fuels and specialties, one in Mumbai (West Coast) with a capacity of around 6.5 million metric tons per annum (MMTPA) and the other in Visakhapatnam (East Coast) with a...

HPCL held another analyst meet within a span of four months to give updates about its aggressive capex plans, different initiatives for improving efficiency, and for investors to interact with the new CMD, MK Surana. Prior to this, Surana was the CEO of Prize Petroleum, an upstream arm of HPCL.HDFC Securities SOTP target is Rs 1,100 (~5.3x FY18E EV/EBITDA for stand. And Rs 199/sh for other investments). Maintain BUY.

Trendlyne has 8 reports on HINDPETRO updated in the last year from 2 brokers with an average target of Rs 1070.Broker has a rating for HINDPETRO with 1 upgrade,2 price upgrades in past 6 months and 1 downgrades,1 price downgrades,2 upgrades and 3 price upgrades in past 1 Year.

Refinery upgrades to boost GRMs, throughputs by 65% Focused on increasing margins; earnings visibility high; valuations attractive We attended the HPCL analyst meet. Following are the key takeaways:...

ICICI Securities Ltd | Retail Equity Research Hindustan Petroleum Corporation's (HPCL) Q4FY16 results were above our estimates. The topline declined 3% QoQ to | 42195.2...

We believe in the near term, benefits from lower crude in terms of balance sheet healing and lower subsidy under-recovery are priced-in. The only trigger left is the marketing margin expansion. However, there may not be a linear increase in margins owing to political compulsions and the government?s directive to increase ethanol blending. We maintain our estimates and TP. Our SOTP target for HPCL is Rs 850 (~4.7x FY18E EV/EBITDA for standalone business and Rs 190/sh from investments).