HPCL slides 3% on profit-taking post inventory gains-driven Q1 numbers

NEW DELHI: Shares of Hindustan Petroleum Corporation ( HPCL) slipped over 3 per cent in Tuesday’s trade after upbeat numbers for June quarter triggered profit taking on the counter. The stock rose 3.25 per cent to hit a high of Rs 1,175.05 on BSE.

Experts said higher sales volume, a substantial increase in inventory gains and stable refining margins helped HPCL report a 30 per cent growth in net profit in Q1 of FY17.

While brokerage CLSA has downgraded the stock to ‘sell’ from ‘buy’, it has raised the target price for the stock to Rs 1,140 from Rs 1,080. The brokerage expects profit-taking on the counter after the recent sharp rally, similar to the correction seen in the stock after the Q1 results.

CLSA has raised EPS estimates for the company by 2-6 per cent, incorporating an increasing value for Bhatinda to 1 time price/book value from 0.75 time earlier.

“The result has been exceptionally good and the performance is definitely showing up in profits that the companies have produced. But when you look at the results and analyse it internally, you will find that a significant amount of the gains were on account of inventory positions. You are not very sure you would be having such advantage in every sequential quarter,” Deven Choksey, MD, KRChoksey Investment Managers told ET Now.