Hold Hindustan Petroleum Corp; target of Rs 545: ICICI Direct

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ICICI Direct's research report on Hindustan Petroleum Corp

HPCL reported GRMs of US$ 8/barrel in Q4FY17 vs. our expectation of US$5.7/barrel. Inventory gains were at US$ 1.5/bbl, which led to better performance despite of increase in employee costs due to implementation of Third Pay Commission recommendations. GRMs in Q4FY17 are expected to remain stable in Q1FY18E due to expected QoQ stability in global product cracks (Singapore GRMs Q1-TD).

Outlook

However, at the current market price, we believe the stock is fairly valued. We have a HOLD recommendation on the stock with a target price of Rs 545 (average of P/BV multiple: Rs 509/share and P/E multiple: Rs 581 per share).

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