Reduce HPCL, target price Rs 340: HDFC Securities

HDFC Securities has a reduce call on Hindustan Petroleum Corporation Ltd. with a target price of Rs 340. The current market price of HPCL is Rs 377.85. Hindustan Petroleum Corporation, incorporated in 1952, is a Large Cap company with a market cap of Rs 80559.36 crore, operating in gas & petroleum sector.

HPCL's key products/revenue segments include Refinery, Rent and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 108773.93 crore, down -4.95% from last quarter Total Income of Rs 114433.54 crore and up 13.20% from last year same quarter Total Income of Rs 96093.37 crore.

The company has reported net profit after tax of Rs 534.69 crore in latest quarter.

Investment Rationale
HDFC Securities' REDUCE rating on Hindustan Petroleum Corporation (HPCL) with a price target of Rs 340 is premised on (1) the risk of lower auto-fuel marketing margins, (2) moderation in refining margins, and (3) elevated debt levels, given the high capex cycle. Q2FY25 EBITDA came in at Rs 27 crore (-67% YoY, +29% QoQ), while PAT came in at Rs 6.3 billion (-88% YoY, +77% QoQ), below the brokerage's estimate, owing to lower-than-expected gross refining margins (GRMs) and higher inventory loss.

Promoter/FII Holdings
Promoters held 54.9 per cent stake in the company as of 30-Sep-2024, while FIIs owned 14.11 per cent, DIIs 21.56 per cent.