Hindustan Petroleum Corporation - Q1FY21 Result Update - ICICI Securities

Hindustan Petroleum Corporation's (HPCL) Q1FY21 results were above our estimates on the profitability mainly due to better marketing segment performance and inventory gains. Revenues fell 35.6% QoQ to Rs. 46107.6 crore due to sharp fall in product sales. On the refining front, core refining performance was weak as core GRMs came in at -US$0.9/bbl. Reported GRMs were at zero as inventory gain of US$0.9/bbl was reported. Marketing segment reported inventory gain of Rs. 432 crore. Hence, EBITDA came in at Rs. 4353.6 crore against estimate of Rs. 3832 crore. Reported PAT was at Rs. 2813.8 crore (our estimate: Rs. 2272.2 crore) against Rs. 26.8 crore in Q4FY20.

Valuations and Outlook

Marketing sales have improved from April lows but are still lower YoY. Fuel demand in July fell MoM due to localised lockdowns and monsoon. Post excise duty hike, HPCL has hiked retail prices by ~Rs. 9-12/litre, which will result in steady marketing margins, going forward. However, we remain neutral on HPCL at the current juncture given the volatility in refining margins. We maintain HOLD rating on the stock with a target price of Rs. 220 (based on average of P/BV multiple: Rs. 247/share, P/E multiple: Rs. 192/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HPCL_Q1FY21.pdf

Shares of HINDUSTAN PETROLEUM CORPORATION LTD. was last trading in BSE at Rs.215.1 as compared to the previous close of Rs. 215.2. The total number of shares traded during the day was 389210 in over 4095 trades.

The stock hit an intraday high of Rs. 219.05 and intraday low of 213.55. The net turnover during the day was Rs. 83957776.

Source : Equity Bulls

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