Buy HPCL, target price Rs 378: HDFC Securities

HDFC Securities has buy call on Hindustan Petroleum Corporation with a target price of Rs 378. The current market price of Hindustan Petroleum Corporation is Rs 317.35.

Time period given by analyst is six months when Hindustan Petroleum Corporation Ltd. price can reach defined target.

Hindustan Petroleum Corporation Ltd., incorporated in the year 1952, is a Large Cap company (having a market cap of Rs 45010.54 Crore) operating in Gas & Petroleum sector.


Hindustan Petroleum Corporation Ltd. key Products/Revenue Segments include Refinery, Rent and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 72838.01 Crore, down -3.39 % from last quarter Total Income of Rs 75394.63 Crore and up 90.10 % from last year same quarter Total Income of Rs 38315.41 Crore. Company reported net profit after tax of Rs 1703.67 Crore in latest quarter.

Investment Rationale
Investors could buy the stock at LTP and add more on dips to Rs. 278-284 band (Rs 224/share for standalone equity value+ Rs 57/share for investment value and CWIP), based on SOTP valuation. Base case fair value of the stock is Rs 352 (Rs 295/share for standalone equity value+ Rs 57/share for investment value and CWIP)) and the bull case fair value of the stock is Rs 378 (Rs 321/share for standalone equity value+ Rs 57/share for investment value and CWIP) over the next 2 quarters. At the CMP of Rs 318 the stock trades at (6.4xFY23E EV/EBITDA, 6.3xFY23E EPS).

Promoter/FII Holdings
Promoters held 54.9 per cent stake in the company as of 30-Sep-2021, while FIIs owned 18.29 per cent, DIIs 15.93 per cent.