Webinar :Register now for webinar on 'Trade BankNifty in just 15 minutes a day' - By Asmita Patel
Last Updated : Nov 10, 2020 12:06 PM IST | Source: Moneycontrol.com

Buy HPCL; target of Rs 308: Motilal Oswal

Motilal Oswal is bullish on HPCL recommended buy rating on the stock with a target price of Rs 308 in its research report dated November 05, 2020.

Broker Research
  • bselive
  • nselive
Todays L/H

Motilal Oswal 's research report on HPCL

HPCL reported better-than-estimated EBITDA, driven by healthy margins (core GRM at USD2.7/bbl, marketing margin at INR6/lit) and sales volumes (8.4mmt). Refining throughput was in line with estimates (4.1mmt). MS and HSD demand for the company was +2.6/-4% YoY of the normal level in Sep'20, which further improved to +4.7/+11.5% YoY in Oct'20. Lubes saw 22.5% YoY growth in 2QFY21. HPCL's sales decline was 2% lower than peers due to better inventory and leverage on its marketing business. Borrowings remain similar to end-Mar'20 levels at INR346b (and INR320b excluding lease liability); receivables from the government stood ~INR40b. The board approved the proposal for a buyback, of up to 100m equity shares, i.e. ~6.56% of total paid-up equity share capital; the amount would not exceed INR25b, at a price not exceeding INR250/share. India is seeing significant increase in vehicular traffic movement, with gradual revival in domestic air travel as well. Currently, gross marketing margins for petrol and diesel are trending at INR5-6/liter (which is higher than the normative long-term average of INR3.6/liter). This would be most beneficial for HPCL as it continues to leverage its marketing business.


We value it at 1.3x (20% discount to FY15-18 post the reform period, factoring in the heavy capex and slurry hydrocracker's project execution risk at Vizag) Sep'22E PBV to arrive at a TP of INR308. Maintain Buy.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on Nov 10, 2020 12:06 pm