HPCL shares slip over 3% despite reporting 52.73% rise in Q3 net profit; here’s why

NEW DELHI: Shares of Hindustan Petroleum Corporation Ltd ( HPCL) declined over 3 per cent in early trade on Tuesday despite the oil marketing company on Monday reported a 52.73 per cent increase in its net profit at Rs 1,590.31 crore for the quarter ended December 31, 2016 on account of higher fuel sales and inventory gains.

It had posted a net profit of Rs 1,041.25 crore in the corresponding period last year.

Global brokerage house CLSA downgraded HPCL shares with a target price of Rs 540 from Rs 480 earlier.

The brokerage house said, “Core refining margin disappointed for three straight quarters and any slowdown in marketing volume growth may question its rich valuations.”

HPCL average gross refining margin (GRM) for the first nine months of the current financial year stood at $5.57 per barrel, as against $6.35 per barrel, in the same period last year.

The company earned $6.38 on turning every barrel of crude oil into fuel in the quarter ended December as against a gross refining margin of $7.86 per barrel a year ago.

The board of HPCL at its meeting held on February 13 also declared an interim dividend of Rs 22.50 per equity shares.