Neutral HPCL; target of Rs 247: Motilal Oswal

Motilal Oswal's research report on HPCL

HPCL reported a beat on both EBITDA and PAT, primarily due to higher-thanexpected GRM at USD9.1/bbl (v/s est. of USD6.2/bbl, up 41% YoY). However, over the past three quarters, HPCL’s GRM has been lower than other OMCs (IOCL, BPCL), due to ongoing expansion at the Vizag refinery.  Refinery throughput stood at 4.8mmt (est. of 5.5mmt; up 14% YoY). Singapore GRM of ~USD6.3/bbl in 3QFY23 has now increased to USD9.6/bbl in 4QFY23’td, which could further improve refining margins in the coming quarter.

Outlook

We expect consolidated net debt to rise ~1.8x to INR793b in FY25E from INR450b in FY22. We value the stock at 0.9x Dec’24E P/BV and recommend a Neutral rating with a TP of INR247.