HPCL - Limited Risk To Robust Retail Margins A Tactical Tailwind: Nirmal Bang

Nirmal Bang Report

During the group investor meetings at our annual investor conference, May 2023, Hindustan Petroleum Corporation Ltd.’s management sounded sanguine about maintaining the current retail pump prices for motor spirit/high speed diesel, which is currently enjoying high margins.

Q1 FY24 retail margins are at ~Rs 9/litre as per our quick estimates. HPCL does not expect to cut prices in line with the 35% YoY decline in Indian basket crude because it sees a rally in crude oil in H2 CY23 and believes that it will be difficult to raise prices again to recoup this increase.

HPCL is planning to hive off the lubricants arm to unlock value (Rs 60 billion revenue, 16% Ebitda margin).

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