Hindustan Petroleum Corporation Ltd. share price target

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 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...

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.

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....

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

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.

Average crude oil prices in Q3FY20 remained flattish compared to Q2FY20. On account of stable costs as well as product prices, core marketing margins remained steady during the quarter. The marketing segment reported inventory gain in Q3FY20 against a loss in QFY20. We expect marketing margins to be stable, going forward, as crude prices have declined in the current quarter (Q4FY20-TD). In terms of marketing sales, HPCL reported growth of 3.4% YoY to 9.8 MMT, marginally above our estimates on account of higher petrol and LPG sales. Going forward, we expect marketing sales...

HPCLs lower-than-expected refining and marketing margins led to an EBITDA miss in 3QFY20. We have cut our FY20 EPS by 21% owing to the huge miss during the quarter and in light of the weak GRM outlook (trimmed GRM from USD4.2/bbl to USD3.0 for 4QFY20) and the lack of improvement in In 3QFY20, the company recorded higher-than-expected marketing sales volumes, which partially offset lower-than-expected marketing margins. Implied gross marketing margins at INR4.1/liter were lower than est. For 9MFY20, core GRM was lower by 54% YoY to USD2.4/bbl, with refining throughput down 9% YoY, led by shutdowns for BS-VI upgradation. Marketing margin was higher by 13% YoY to INR4.1/liter, while domestic sale of petroleum products was up 5% YoY at 30.1mmt. We have cut our FY20 EPS by 21% owing to the huge miss during the quarter and in light of the weak GRM outlook (trimmed GRM from USD4.2/bbl to USD3.0 for 4QFY20) and the lack of improvement in diesel cracks ahead of IMO.