HPCL - Gross Refining Margins Remain Strong But Marketing Leverage Poses Risk: Motilal Oswal

HPCL - Gross Refining Margins Remain Strong But Marketing Leverage Poses Risk: Motilal Oswal

A car is filled with petrol at a filling station. (Source:  pxhere)

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Motilal Oswal Report

Hindustan Petroleum Corporation Ltd.’s reported Ebitda beat on our estimates was primarily driven by higher-than-estimated marketing gross margin (Rs 2.7/liter, down 54% YoY, down 9% QoQ), while gross refining margin was a miss by 37% and stood at $12.5/barrel of oil.

Refining throughput was in line and stood at 4.7 million metric tonne (up 7% YoY, up 11% QoQ).

Singapore GRM has been at a record high of $22.6/bbl in May 2022 from a loss of $1.5/bbl in May 2020 (during the pandemic).

It stood at $2.1/ $18.6 per bbl in May 2021/April 2022. However, oil marketing companies are estimated to be generating losses of Rs 8.8/Rs 12.9 per liter on petrol/diesel at prevailing benchmark prices, respectively.

HPCL has the highest leverage to marketing and would suffer from mounting losses in the marketing segment.

Click on the attachment to read the full report:

Motilal Oswal HPCLCompany Update.pdf
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