HPCL - Higher government support saves the day - AXIS Securities

HPCL reported PAT of Rs 1.4 bn vs. our loss estimate of Rs 8.2 bn, as lower refining margin (GRM) and higher interest costs were more than offset by higher subsidy support from government.

- Refinery throughput rose 15% QoQ to 4.22 mnte as CDU units at Vizag refinery resumed operation after maintenance shutdown in Q2

- Inventory gain stood at Rs0.7bn vs. loss of Rs 2.5 bn in Q2 The company reported loss of Rs 64 bn in 9MFY13, which implies that government needs to release additional subsidy support of Rs 500 bn (Rs 550 bn in 9MFY13) to oil marketing companies (OMCs) to make HPCL profitable on FY13 basis. Historically, the government has never allowed OMCS to slip into the red by adequately providing subsidy support.

Source : Equity Bulls

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