HDFC Securities is bullish on HPCL has recommended buy rating on the stock with a target price of Rs 476 in its research report dated September 10, 2018.
HDFC Securities' research report on HPCL
HPCL’s 1.34% YoY growth in EBITDA and 2.7% growth in PAT in FY18 was misleading as the FY17 base was formed due to high inventory gains and one-off costs. However, FY18 performance reflects strong operational performance in both refining and marketing businesses. Core EBITDA (net of inventory gains/losses, forex gains/losses, one-off costs, and other operating income) and PAT were thus up 34.5% and 49.2% YoY.
Outlook
Currently, the stock is trading at 6.1x FY21E EV/EBITDA and 7.0x FY21E P/E. Hence, we believe that the stock is currently undervalued. Maintain BUY with target price of Rs 476/share.
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