Emkay Global Financial's research report on HPCL
HPCL reported standalone EBITDA/PAT of Rs33bn/Rs23.5bn, down 8%/5% qoq (6%/32% beat). PAT beat was driven by a 51% qoq decline in interest, 75%/94% yoy/qoq jump in Other Income and Rs3bn forex gain. EBITDA was higher due to lower opex. Reported GRM stood at USD1.9/bbl in Q3 (vs. USD3/bb est). Core GRM came in at negative USD1/bbl (est. +USD2.0). Marketing inventory gain of Rs7.1bn implies blended marketing margin of Rs5.8/kg, down 2% qoq (6% miss). Domestic sales grew 3% yoy. Gross debt fell 4% qoq to Rs333.4bn (up 17% yoy) with Rs27bn of lease liability. 10M capex was Rs88bn (Rs120bn FY21 target), while outstanding subsidy is Rs40bn. Q3 core EPS stood at Rs7.7 (13% miss). HPCL bought back 40.7mn (Rs8.9bn) shares so far.
Outlook
We cut FY22/23E by 10%/7%, assuming lower marketing margins. We roll forward valuations to Mar’23E and raise the TP by 2% to Rs285. Retain Buy and OW.
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