Buy Hindustan Petroleum; target of Rs 625: ICICI Securities

ICICI Securities is bullish on Hindustan Petroleum recommended buy rating on the stock with a target price of Rs 625 in its research report dated March 15, 2024.

Broker Research

March 15, 2024 / 12:35 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

ICICI Securities research report on Hindustan Petroleum

The Ministry of Petroleum and Natural Gas officially announced a price cut of INR 2/ltr for both petrol and diesel across the country, which will be borne entirely by the OMCs with effect from 15 Mar’24. Despite the sentiment attached to the price cuts, we in fact are enthused by the reasonable level of price cuts, given the market realities, investment needs of the OMCs and the need to absorb the recent LPG price cut over FY25E if needed. We maintain that our assumptions of gross margins of INR 3.2/ltr (net margins of ~INR 1.7/ltr) for FY25E and INR 3.5/ltr for FY26E (~net INR 1.9/ltr) face no downside risk from this pricing action; and the combination of higher refining throughput (Vizag) along with the addition of petchem (Rajasthan) creates strong momentum for HPCL over the next 2-3 years. Reiterate BUY.

Outlook

Our valuation for the company, at ~5.3x FY26E EV/EBITDA for the refining and marketing business, with listed investments valued at CMP delivers a revised target price of INR 625 (earlier INR 555), a material ~25% upside from CMP. Reiterate BUY.

For all recommendations report, click here