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ICICI Securities Report
Hindustan Petroleum Corporation Ltd.'s recurring standalone Ebitda /profit after tax for Q1 FY24 came in at Rs 86.6 billion / Rs 54.6 billion, up 81% /70% QoQ, respectively (Q1 FY23 saw huge losses for HPCL) versus our estimates of Ebitda of Rs 83 billion and profit after tax of Rs 52 billion.
The QoQ improvement was driven by higher refining throughput, strong marketing volumes and a two times improvement in blended marketing margin (aided by retail fuel margin of Rs 8.7/litre, up 3.6 times QoQ).
Overall, FY24E and FY25E are likely to see stronger recovery with sharp increase in refining throughput, led by the commissioning of ~7 million tonnes per annum Vizag (in Andhra Pradesh) refinery and ~9 mtpa Rajasthan refinery (50% share).
While we build in more conservative marketing margin profile for the rest of FY24E, continued strength in gross refining margins, steady volume growth for both refining and marketing and an improving balance sheet, coupled with still very attractive valuations, underpin our 'Buy' rating on the stock.
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