Buy Hindustan Petroleum Corporation; target of Rs 280: Prabhudas Lilladher
Prabhudas Lilladher is bullish on Hindustan Petroleum Corporation has recommended buy rating on the stock with a target price of Rs 280 in its research report dated November 05, 2020.
November 12, 2020 / 03:19 PM IST
Prabhudas Lilladher's research report on Hindustan Petroleum Corporation
We increase our FY21E earnings estimates by 35% to incorporate inventory gains of Rs24bn in H1FY21 and make minor changes; FY22-23E estimates are unchanged. During Q2FY21, core standalone EBIDTA adjusted for inventory gains was lower at Rs18.2bn (-51%QoQ) due to lower marketing earnings. Weak global demand and high inventory levels is likely to keep crude oil prices range bound, which will support 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.
Decision to buy back 6.6% of equity at Rs250/sh for Rs25bn is value accretive, in our view. Maintain BUY with a TP of Rs280 (unchanged).
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