Anand Rathi has given Buy recommendation for Hindustan Petroleum Corporation with a target price of Rs. 306 in its research report issued on Aug 21, 2021
Anand Rathi’s research report on Hindustan Petroleum Corporation
Hindustan Petroleum Corporation Limited (HPCL) has recorded Profit after Tax (PAT) of Rs. 20.04 billion compared to Rs. 22.53 billion lower by 11.0 % for the same quarter last year due to a planned shutdown of the refinery, some on the industrial products which they directly supply from the refineries and an exchange rate loss. EBITDA came at Rs. 31.93 billion decline by 26.8% on YoY and 32.6% on QoQ. Gross sales for the quarter ended June was Rs. 735.6 billion as compared Rs. 459.5 billion for the same period last year. During April-June 2021, HPCL achieved total sales volume of 8.83 MT against 7.62 MT in previous year for the same period representing a growth of 15.9 %.The sales of major products have shown significant growth compared to same period last year despite an aggressive second wave of Covid-19 pandemic forcing partial lockdowns across the country. The sale of petrol was up 36.6 %, diesel 22.2 % and Aviation Turbine Fuel, 118.8 %. While petrol sales in July reached pre-pandemic levels, diesel is about 10% short.
Outlook
We have a positive outlook on HPCL given its earnings growth visibility on the back of its capex plans and improvement marketing margin environment. Company also is doubling its existing capacity at Visakh and Mumbai refinery, this will drive the earnings for its refinery business. We value HPCL at 6X FY23 EPS and maintain our BUY rating on the stock with revised target price of Rs. 306.