Prabhudas Lilladher is bullish on Hindustan Petroleum Corporation has recommended buy rating on the stock with a target price of Rs 280 in its research report dated June 17, 2020.
Prabhudas Lilladher's research report on Hindustan Petroleum Corporation
We tweak our FY21/22 earnings estimates. In FY20, core EBIDTA adjusted for inventory and forex loss was stable at Rs103bn (-4%YoY vis-à-vis -55%YoY reported) despite lower refining margins ($1.0/bbl vs $5.0/bbl in FY19). Sharp drop in crude oil prices dragged down reported FY20 PAT, however, with its recovering part of the losses will be reversed. Benign crude oil prices to likely support marketing margins in medium term, whereas lower operating cost to compensate for weak GRMs.
Outlook
Maintain BUY with a PT of Rs280 as HPCL with high refining to marketing ratio is best placed in a benign crude environment.
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