HPCL Q3 Results Review - Beat In Estimates, Led By Higher-Than-Expected Gross Refining Margin: Motilal Oswal

Motilal Oswal Report

Hindustan Petroleum Corporation Ltd. reported a beat on both Ebitda and profit after tax, primarily due to higher-than expected gross refining margin at $9.1/barrel of oil (versus estimate: of $6.2/bbl, up 41% YoY).

However, over the past three quarters, HPCL’s GRM has been lower than other oil marketing companies, due to ongoing expansion at the Vizag refinery.

Refinery throughput stood at 4.8 million metric tonne (our estimate: of 5.5 mmt; up 14% YoY). Singapore GRM of ~$6.3/bbl in Q3 FY23 has now increased to $9.6/bbl in Q4 FY23-to-date, which could further improve refining margins in the coming quarter.

In the marketing segment, sales volumes were in line with estimates at 11.4 mmt (up 7% YoY). OMCs are estimated to be generating a gross marketing margin of Rs 8.6/1.4 per liter on petrol/diesel, respectively, in Q4 FY23-to-date.

HPCL has highest leverage to marketing amongst OMCs and would benefit the most due to improvement in marketing margins.

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