Prabhudas Lilladher's research report on Hindustan Petroleum Corporation
We change our FY24/25 EPS estimates by 8.5/17.6% due to changes in GRM estimates. Hindustan Petroleum Corporation (HPCL) reported better than expected Q2 results with EBITDA of Rs82.2bn (-14% Q/Q; PLe: Rs 59.2bn) and PAT of Rs51.2bn (-18% Q/Q; PLe: Rs34.1bn). Refining margins and gross marketing margins(GMM) came in higher than estimates at US$13.3/bbl and Rs 5.9/ltr. Going ahead, we build in GRMs of US$6/bbl and GMM of Rs4.5/ltr for FY25-26E. The stock is currently trading at 0.9x P/BV and 4.4x EV/EBITDA.
Outlook
On account of weakening Singapore GRMs and inability to pass on increase in fuel costs coupled with upcoming elections, we maintain ‘Hold’ rating with a TP of Rs272 (earlier Rs263) based on 0.7x FY26 P/BV.
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