Hindustan Petroleum Corporation - Result Update - ICICI Securities

Hindustan Petroleum Corporation's (HPCL) Q4FY20 results were above our estimates on the operational front. Revenues fell 4.1% QoQ to Rs. 71554.6 crore due to lower product sales. Both marketing & refining segment reported inventory losses. On the refining front, reported GRMs were at -US$1.2/bbl, impacted by inventory loss of US$10.6/bbl while core GRMs were at US$9.4/bbl. EBITDA loss was at Rs. 706.6 crore vs. estimated loss of Rs. 151.8 crore, impacted by forex loss of Rs. 975 crore. HPCL reported exceptional loss of Rs. 1002.9 crore owing to write down of inventories due to fall in oil prices. PAT was at Rs. 26.8 crore, down 96.4% QoQ (estimated loss: Rs. 628.4 crore) due to tax write-back as HPCL shifted to a lower tax rate.

Valuations & Outlook

Marketing sales were affected due to the extended lockdown in April & May but have improved sharply in June. Petrol & diesel demand is currently at 82-88% of normal level. The management indicated it could reach up to 90% by June end. Post excise duty hike, HPCL has hiked retail prices by ~Rs. 6/litre in June, 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 recommendation on the stock with a target price of Rs. 215 (based on average of P/BV multiple: Rs. 232/share and P/E multiple: Rs. 197/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HPCL_Q4FY20.pdf

Shares of HINDUSTAN PETROLEUM CORPORATION LTD. was last trading in BSE at Rs.222.95 as compared to the previous close of Rs. 214.2. The total number of shares traded during the day was 499575 in over 8787 trades.

The stock hit an intraday high of Rs. 224.25 and intraday low of 213. The net turnover during the day was Rs. 110114418.

Source : Equity Bulls

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