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
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