MOSL: HPCL (Neutral)-Capex weighs heavy on the books…
HPCL: Capex weighs heavy on the books…
(HPCL IN, Mkt Cap USD6.4b, CMP INR291, TP INR335, 15% Upside, Neutral)
We recently met the management of HPCL wherein the company’s capex plans, marketing margins and refinery margins were the main points of discussion. Key highlights:
Coronal capex cycle
- The Vizag expansion from 8.33mmtpa to 15mmtpa is expected to get completed by FY22. Company expects to achieve stabilization of refinery in a span of 9-12months, while we believe it could take longer.
- The incremental 2mmtpa from the Mumbai refinery expansion is expected to reflect in the company's volumes from mid-FY21.
- Already ~80% of the orders (out of the total capex at ~INR290b) are in place for both the Vizag and Mumbai refineries.
- The Rajasthan refinery is expected to have a total capex of ~INR440b, including the company's equity commitment of ~INR110b. The company has already spent ~INR15-16b with ~INR5-6b towards equity commitment. Expected capex to be spent - of the total INR110b, ~10%/20% in FY20/21.
- Also, polypropylene expansion at Bhatinda is expected to get completed in the next 2-3 years (currently expansion is ~30% complete), with a total capex of INR160b.
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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