MOSL: HPCL (Buy)-Reported GRM poor, EBITDA misses estimate
HPCL: Reported GRM poor, EBITDA misses estimate
(HPCL IN, Mkt Cap USD6.7b, CMP INR310, TP INR364, 17% Upside, Buy)
- Lower-than-estimated GRM (incl. inventory) and marketing margin resulted in reported EBITDA of INR24.4b (-19% YoY; -17% miss) in 2QFY20. Total inventory gain stood at INR530m (refining gain at INR660m, while marketing loss at INR130m). Adj. EBITDA for the quarter was up 38% YoY at INR23.9b.
- During the quarter, forex loss stood at INR1.2b versus INR8.9b in 2QFY19. PBT was at INR16.2b, and the tax rate at 34.9% as the company is in the process of evaluating the new reduced tax rate option. PAT declined 4% YoY to INR10.5b.
- For 1HFY20, reported EBITDA was down 42% YoY at INR38.9b and PAT declined 34% YoY to INR18.6b. Total inventory loss was at INR4.8b versus a gain of INR36.1b in 1HFY19, which led to adj. EBITDA of INR43.7b (+40% YoY).
- Refining throughput was down 4% YoY at 4.6mmt but up 16% QoQ after the shutdown at its Mumbai refinery. High sulphur crude processing declined to 54.8% from 63.7% in the year-ago period.
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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