Accumulate Hindustan Petroleum Corporation; target of Rs 422: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Hindustan Petroleum Corporation

Hindustan Petroleum Corporation (HPCL) reported refining throughput of 6.66mmt during the quarter with a reported GRM of USD3.08/bbl and implied gross marketing margin (GMM) of Rs7/lit (Rs3.0/lit in Q1FY25). Due to better GRM and GMM, standalone EBITDA grew 261% YoY to Rs76bn (Ple Rs89bn, BBGe Rs81bn) but came in lower-than-estimate due to poorer-than-estimated GRM (Ple USD6.2/bbl). We believe GRMs will rebound to the long-term average of USD5-7/bbl in FY26/27 and build in a GRM of USD6/7/bbl for FY26/27E. On the marketing front, we build in a GMM of Rs4.4/4.5/4.9/lit for FY25/26/27E. The company has reduced its debt from Rs633bn in FY25-end to Rs510bn in the quarter.

Outlook

The stock has corrected by ~10% in past few days. Due to possible strength in GMM in near term along with crude oil correction, we upgrade the stock to Accumulate with target price of Rs422 (earlier Rs360), valuing it at 1.3x FY27 PBV.

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Hindustan Petroleum Corporation - 11082025 - prabhu