The brokerage estimates Q1FY21E EPS of HPCL to be up 266 per cent year on year.
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ICICI Securities has given a buy rating to Hindustan Petroleum Corporation Ltd with a target price of Rs 278. The share price moved down by -0.31 per cent from its previous close of Rs 211.80. The stock’s last traded price is Rs 211.15.
The brokerage estimates Q1FY21E EPS of HPCL to be up 266 per cent year on year. The main earnings driver would be a record net marketing margin of Rs 6.11/l (up 3.3 times year on year) and inventory gain of Rs 5.5-8.5 billion vs loss or smaller gain in Q1FY20. HPCL’s GRM is estimated to be up 2.1-9.3 times year on year at $5.9-6.9/bbl boosted by discounts on crude ($3.4-3.6/bbl).
In Q1, crude inventory gain is estimated at $0.6/bbl for HPCL. The cost of opening crude inventory of OMCs being high at $36-38/bbl meant big inventory loss for all in Apr’20. HPCL gained from its high utilisation of crude inventory. sales volume fall is estimated at 26-28 per cent year on year. HPCL’s throughput is assumed to be flat year on year as it was up 6 per cent year on year in Apr-May’20. July ’20 crude inventory gains could actually be higher at US$2/bbl for HPCL. The cost of opening Q2FY21 inventory of BPCL is estimated at $40/bbl while spot price in July’20-TD is at$42.5/bbl. This may mean Jul’20-TD GRM is higher at $5.0/bbl for HPCL.
HPCL’s refinery utilisation at 98% in Apr-May’20 vs 43-93% for other Indian refiners
Financials
For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 65967.46 crore, down -6.45 per cent from last quarter sales of Rs 70518.09 crore and down -2.58 per cent from last year's same quarter sales of Rs 67713.29 crore. The company reported net profit after tax of Rs 517.80 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 51.11 per cent stake in the company as of March 31, 2020, while FIIs held 17.72 per cent, DIIs 21.66 per cent and public & others 9.51 per cent.
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