HPCL Q3 Results Review - Performance Below Expectations On Weaker Marketing Margins: Yes Securities

Yes Securities Report

Hindustan Petroleum Corporation Ltd.'s quarterly performance showcases surprise weaker marketing performance, while gross refining margins and inventory gains was inline to our estimates.

With Ebitda at Rs 21.6 billion and profit after tax at Rs 5.3 billion, the company demonstrated the challenges it faced in marketing of high speed diesel and other key products where gross margins were impacted.

HPCL's reported Ebitda and PAT is lower than our estimates but closer to the consensus expectations. The reported GRM of $8.5/barrel of oil and Rs 2.9/litre of blended gross marketing margins, while the core integrated margins stood weaker at $2.6/bbl.

We maintain 'Buy' rating with an unchanged target price of Rs 574 valuing it on SOTP (core business at 6.5 times enterprise value/Ebitda and investments at Rs 83).

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