Buy Hindustan Petroleum Corporation; target of Rs 280: Prabhudas Lilladher

Prabhudas Lilladher's research report on Hindustan Petroleum Corporation

We maintain our FY21/22 earnings estimates. During Q1FY21, core standalone EBIDTA adjusted for inventory gains was healthy at Rs37.2bn (+71%YoY) despite lower refining margins ($0.04/bbl vs $0.75/bbl in Q1FY20). Weak global demand and high inventory levels to likely keep crude oil prices range bound, thereby supporting marketing margins in medium term. Meanwhile GRMs will recover with pickup in economic activity and lower operating cost (due to soft spot LNG prices) will support refining earnings.

Outlook

HPCL remains one of our preferred pics in the oil and gas sector given high share of marketing. Maintain BUY with a PT of Rs280.

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