MOSL: HPCL (Buy)-Adj. EBITDA significantly below estimate; core GRM at USD3.7/bbl
HPCL: Adj. EBITDA significantly below estimate; core GRM at USD3.7/bbl
(HPCL IN, Mkt Cap USD6.3b, CMP INR282, TP INR428, 51% Upside, Buy)
- HPCL’s reported EBITDA of INR37b (+129% YoY, +28% QoQ) was above our estimate of INR29b. However, total inventory gain stood at INR19b (est. of INR3.4b) – refining inventory gain stood at INR7.7b (USD3.43/bb) and marketing gain stood at INR11.4b. Adjusting for the same, EBITDA stood at INR18b (est. of INR25b; -43% YoY, -34% QoQ), significantly below our estimate due to a poor core GRM. PAT stood at INR17.2b (est. of INR15.2b; +86% YoY; -2% QoQ), impacted by a forex loss of INR5.4b during the quarter. We have accounted for a forex loss along with other income.
- Core GRM stood at USD3.72/bbl (est. of USD5.5; USD6.6 in 4QFY18 and USD8.8 in 1QFY18). Core GRM was lower due to higher fuel and loss; distillate yield declined 2.7% sequentially. Refining throughput grew 1% YoY (-2% QoQ) to 4.5mmt.
- Marketing sales volume grew 5% YoY (+3% QoQ) to 9.7mmt in 1QFY19. Implied gross marketing margin including inventory expanded 46% YoY (+5% QoQ) to INR4.6/liter. Net of inventory gain, marketing margin stood at INR3.6/liter.
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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