MOSL: HPCL (Upgrade to Buy)-Better core GRM-throughput lower due to shutdown at Mumbai refinery
HPCL: Better core GRM; throughput lower due to shutdown at Mumbai refinery
(HPCL IN, Mkt Cap USD5.3b, CMP INR245, TP INR295, 21% Upside, Upgrade to Buy)
** Lower-than-estimated GRM (incl. inventory), throughput and marketing margin led to a 61% YoY decline in reported EBITDA to INR14.5b (55% miss). Adjusting for the huge inventory loss of INR5.4b (v/s gain of INR23.3b in 1QFY19), EBITDA for the quarter was up 42% YoY at INR19.9b. Forex gain stood at INR1.9b v/s a loss of INR5.4b in 1QFY19. PAT came in at INR8.1b (-53% YoY) in the quarter.
** HPCL reported Ind-AS 116-based 1QFY20 earnings, which led to an increase in depreciation charges by 15% YoY to INR8.2b and in interest cost by 8% YoY to INR2.1b.
** Core GRM for the quarter was at USD3.3/bbl (v/s USD3.2 in 1QFY19 and USD2.1 in 4QFY19), in line with Singapore GRM at USD3.5/bbl.
** Refining throughput was at 3.9mmt (-13% YoY) owing to shutdown at its Mumbai refinery.
** Marketing sales volume grew 4% YoY to 10.1mmt in 1QFY19. Implied gross marketing margin including inventory stood at INR4.3/lit (v/s INR4.6 in 1QFY19).
** Pipeline throughput stood at ~5.3mmt (v/s ~5.5mmt in 1QFY19).
** As of quarter-end, HPCL’s debt stood at INR204.3b, down by 25% from INR 272.42bn as on 31st Mar’19.
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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