MOSL: HPCL (Buy)-Adj. EBITDA significantly above estimate; core GRM at USD6.6/bbl
HPCL: Adj. EBITDA significantly above estimate; core GRM at USD6.6/bbl
(HPCL IN, Mkt Cap USD7.0b, CMP INR312, TP INR507, 63% Upside, Buy)
- HPCL’s reported EBITDA of INR29.2b (+1% YoY, -7% QoQ) in 4QFY18 was slightly higher than our estimate of INR27.8b. However, EBITDA adjusted for inventory gains stood at INR27.7b (-2% YoY, +64% QoQ), significantly above our estimate of INR22.4b, primarily led by higher GRM and lower inventory gains. HPCL reported total inventory gain of INR1.6b in 4QFY18 (est. of INR5.5b): INR1.04b (~USD0.5/bbl) in refining and INR530m in marketing. The quarter witnessed a forex loss of INR840m. PAT declined 4% YoY (-10% QoQ) to INR17.5b (est. of INR14.2b).
- Core GRM stood at USD6.6/bbl, higher than our estimate of USD4.6/bbl. Core GRM in 4QFY17 and 3QFY18 stood at USD8.5/bbl and USD6.1/bbl, respectively. Refining throughput grew 2% QoQ (flat YoY) to 4.6mmt.
- Marketing sales volume grew 7% YoY (flat QoQ) to 9.5mmt in 4QFY18. Implied gross marketing margin including inventory rose 9% YoY (+42% QoQ) to INR4.4/liter.
- For FY18, EBTIDA stood at INR106b (flat YoY) and PAT grew 2% YoY to INR64b. Core GRM stood at USD6.74/bbl and refining throughput at 18.3mmt, implying 116% utilization.
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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