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Motilal Oswal Report
We expect Hindustan Petroleum Corporation Ltd.'s capex at ~Rs 150 billion annually during FY24-25. The company plans to enhance its refining and marketing infrastructure, foray into petrochemicals, and expand footprints into alternate energy.
Completion of various ongoing projects is expected to drive growth over the next three to five years such as: Bhatinda refinery expansion, expansion of Vizag refinery, and new Rajasthan (Barmer) refinery in May 2024.
Further, HPCL is working on petchem projects, including the establishment of a 4.6 metric million tonnes per annum petrochemical capacity by FY25E through joint ventures.
This strategic initiative aims to position the company as the second-largest petrochemical production facility in India.
Despite the potential highlighted above, we reiterate our 'Neutral' rating on the stock because of the project execution risk at Vizag and rising debt levels.
We value the stock at 0.8 times FY25E price/book value to arrive at our target price of Rs 265.
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