Brokerages Mixed On HPCL’s Future Performance

Hindustan Petroleum Corporation Ltd. (HPCL) reported a good set of numbers as the oil marketing company's core gross refining margins came in at $8.8 per barrel as against $6.4 per barrel. The stock gained as much as 16 percent in the last five trading sessions—the highest among the three state-owned companies.

Net profit of the third largest oil marketing company almost halved sequentially to Rs 925 crore, while revenue declined 3.8 percent to Rs 53,469 crore year-on-year.

Here's what brokerages said:

CLSA

• Maintain Sell
• Target price hiked to Rs 405 from Rs 360
• GRMs a big surprise in Q1FY18; EBITDA miss on high inventory loss
• Unsure about maintaining core GRMs well above Singapore benchmark
• Expect competition from private players to remain strong in marketing
• Raises FY18/19 EPS estimates by 16/14 percent

JPMorgan

• Maintains Underweight
• Target price at Rs 300
• JPMorgan would not buy HPCL stock based on the implied Q1FY18 GRM of $8.8/bbl
• With higher crude prices expect some reversal of inventory losses
• Prefer IOCL and BPCL given the volume growth in the refining segment

Nomura

• Maintains Buy
• Target price hiked to Rs 510 from Rs 427
• Continue to remain bullish on the back of Government's continuing move to bring more reforms and strong refining
• Stake sale to ONGC continues to remain overhang, and it will catch up peers
• Raises earnings per share estimates by 3-7 percent for FY18/19

Kotak Securities

• Maintains Reduce
• Target price hiked to Rs 420 from Rs 380
• HPCL reported strong EBITDA on the back of higher margins from refining and marketing segments
• Global GRMs strong at $7.3 per barrel due to increased unplanned shutdowns
• Existing GRM trends might not continue given sharp deviation in the company's performance during quarters with inventory fluctuation