Hindustan Petroleum Corporation Ltd. share price target

HPCL reported a beat on EBITDA led by better-than-estimated marketing sales volumes (+9% est., at 10.1mmt), refining (at USD8.1/bbl) and marketing margin (at INR6/lit). Marketing volumes de-growth for HPCL was at 6.6% v/s ~9% for the industry in FY21, resulting in a gain in market share. Since Apr'21, there is contraction in demand for petroleum products due to localized lockdowns (with petrol/diesel consumption down 30% in May'21 v/s May'19). As per our calculations, gross marketing margin for petrol/ diesel stands at -INR0.3/+INR3/liter currently. Refineries at Visakhapatnam...

HPCL's Q3FY21 result was a beat to our and consensus forecast at all parameters primarily led by higher inventory gains and lower interest costs and higher other income. Reported GRM came at US$1.9/bbl but after adjusting to inventory gains it comes to US$1/bbl, below our estimate. Petroleum product sales volume/crude throughput declined 2%/4% YoY to 10.4/4.0mmt. However, strong marketing margin on auto fuels led growth during the quarter. HPCL has guided for addition of 2mmt of refining capacity at Mumbai from CY22 and ~5mmt refining capacity by end CY21. Also, it expects Rajasthan Refinery of 9mmt to complete by CY23 and Chhara LNG terminal by CY22. We expect HPCL to benefit from...

We increase our FY21E earnings estimates by 30% to incorporate 9MFY21 inventory gains of Rs37.4bn and higher other income; FY22-23E estimates changed by -4/9% to factor in higher depreciation and increased marketing volumes. During Q3FY21, core standalone EBIDTA adjusted for inventory and forex gains was at Rs16.8bn (17%YoY) due to higher marketing earnings....

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...

HPCL's Q2FY21 result was largely in line with our forecast while it was a beat to consensus estimates. Higher inventory gains and GRM was partially offset by lower volumes. Reported GRM came at US$5.1/bbl owing to inventory gain of Rs5.2bn (US$2.4/bbl) while core GRM stood at US$2.8/bbl, beat to our estimate. Petroleum product sales volume declined 10% YoY to 8.4mmt while crude throughput decline 11% to 4.1mmt. The company announced a buyback from open market to the tune of Rs25 bn, which is 6.6% of equity at a maximum price of Rs250/share. The company indicated that merger of OMPL with MRPL would get over by FY21 and MRPL with HPCL in FY22....

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).

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....

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...

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...