Buy HPCL; target of Rs 450: Emkay Global Financial

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Emkay Global Financial's research report on HPCL

HPCL reported better than expected Q3FY25 earnings with EBITDA/PAT of Rs64.5/30.2bn, a 10%/19% beat, driven by better-than-expected GRMs and marketing volumes. Reported GRM was USD6/bbl (vs USD5/bbl est), while core was even better at USD6.9. Blended marketing margin at Rs7.6/kg was a 5% miss but offset by 3% lower opex. Domestic marketing volumes rose 8.5% vs 4.5% of industry, while petrol/diesel grew 9.2%/4.9%, in line with industry but better than PSUs. Gross debt fell 18% QoQ to Rs540bn while 9MFY25 capex was Rs94.8bn. HPCL’s refining performance is set to improve as Vizag resid stabilizes this year.

Outlook

We assume Rs50bn of LPG subsidy in Q4 and raise FY25E EPS by 16% but cut FY26/27E EPS by 7-10% building in lower benchmark GRMs. We cut Dec-25E TP by 5% to Rs450. We maintain BUY rating on the stock.

For all recommendations report, click here

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HPCL - 27012025 - emkay