August 24, 2016 / 19:01 IST
Religare's research report on HPCL
HPCL’s Q1FY17 earnings outperformed estimates at Rs 21bn (+35% QoQ) led by (a) higher-than-expected GRMs (US$ 6.8/bbl; -9% QoQ), (b) increased refining output (4.5mmtpa; -4.7% QoQ), (c) lower interest costs (Rs 1.4bn; -27% QoQ) and (d) inventory gains (Rs 22bn). However, benchmark GRMs trend lower, on decline in light distillate spreads, which could impact HPCL the most among OMCs. HPCL seems to be losing market share too. HOLD with an unchanged SOTP-based Sep’17 TP of Rs 1,275 (implying 8.7x FY18E EPS).
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