Buy Hindustan Petroleum Corporation; target of Rs 445: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Hindustan Petroleum Corporation has recommended buy rating on the stock with a target price of Rs 445 in its research report dated November 03, 2021.

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November 03, 2021 / 11:36 AM IST

500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" title="HDFC Securities research report's outlook and valuations: "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" width="100%" height="auto" >

HDFC Securities research report's outlook and valuations: "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

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Prabhudas Lilladher's research report on Hindustan Petroleum Corporation

We increase our FY22-24E estimates by 5-11% to factor in to factor in higher GRMs led by 1) pickup in global economic activity and 2) gas to oil shift due to high prices even as there has been softening of marketing margins. HPCL reported lower than expected Q2 results with standalone EBITDA of Rs30.1bn (-6%QoQ; PLe Rs36.7bn) and PAT of Rs19.2bn (+7%QoQ; PLe Rs25.43bn), led by lower than expected refining earnings. Refinery operations were hit by shutdown of one unit each at Mumbai and Vizag refinery and high fuel & loss. OMCs are well placed to benefit from global pickup in economic activity post pandemic as their refining and marketing earnings will improve.

Outlook

Maintain ‘BUY’ with a revised PT of Rs445 (Rs404) based on 8x PER FY23E and add value of investments.

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