MOSL: HPCL (Buy)-EBITDA above estimate-GRM at ~USD8/bbl
​HPCL: EBITDA above estimate; GRM at ~USD8/bbl
(HPCL IN, Mkt Cap USD8.7b, CMP INR567, TP INR632, 11% Upside, Buy)
- 4QFY17 EBITDA stood at INR27.8b (est. of INR20.8b; +8% YoY, -3% QoQ), led by (a) reported GRM of USD7.99/bbl (includes inventory loss of USD0.5/bbl) and (b) product inventory gain of INR7b. Reported PAT rose 31% YoY (+14% QoQ) to INR18.2b (est. of INR11.1b) as the impact of higher-than-expected interest cost of INR2.3b (est. of INR700m; +15% YoY, +328% QoQ) was negated by higher other income of INR5.2b (est. of INR3.3b; +7% YoY, +126% QoQ) and a lower tax rate at 24% (v/s 34% in 3QFY17 and 37% in 4QFY17). Management has taken a provision of INR4.5b on account of pay revision.
- GRM at ~USD8/bbl: HPCL's core operating GRM of USD8.5/bbl was above our estimate, with reported GRM at ~USD8/bbl (est. of USD5.6; +6% YoY, +25% QoQ). Product inventory gains stood at INR7b in 4QFY17 v/s loss of INR290m in 4QFY16 and INR7b in 3QFY17. Forex gain stood at INR1.5b in 4QFY17 v/s loss of INR1.6b in 3QFY17 and loss of INR3b in 4QFY16.
- Marketing volumes including exports down 2% YoY: While marketing sales fell 2% YoY to 8.9mmt, refinery throughput was at 4.6mmt (-1.3% YoY, flat QoQ).
Hindustan Petroleum is engaged in the refining and marketing of petroleum products. Co. operates 2 major refineries producing a wide variety of petroleum fuels & specialties, one in Mumbai (West Coast) of 6.5 Million Metric Tons Per Annum (MMTPA) capacity and the other in Vishakapatnam, (East Coast) with a capacity of 8.3 MMTPA. Co. also owns and operates a Lube Refinery producing Lube Base Oils of international standards, with a capacity of 428 TMT. Co.'s marketing network is facilitated by a Supply & Distribution infrastructure comprising Terminals, Pipeline networks, Aviation Service Stations, LPG Bottling Plants, Inland Relay Depots & Retail Outlets, Lube and LPG Distributorships.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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