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Hindustan Petro.
FY11E EPS estimated at
Rs40.1; could have been worse
„Cut FY11 EPS by 11%; cut could have been lot steeper
FY11 subsidy sharing has been finalized. The main surprise was that upstream
companies’ share in FY11 subsidy was raised to 38.7% as against the expected
33.3%. Rise in upstream share in subsidy to 38.7% meant R&M companies’ share
in subsidy is 8.8%. R&M companies like HPCL have thus gained from the rise in
upstream share in subsidy but their subsidy hit is still higher than our optimistic
assumption. We therefore cut our estimate of HPCL’s FY11E EPS by 11% to
Rs40.1. However, its FY11E EPS could have been far lower at Rs22.8 if
upstream share in subsidy was 33% and R&M had to bear 14%. HPCL is
inexpensive in our view, trading at its FY11 book value (P/BV at 0.97). A
near term trigger is likely to be fuel price hike to cut FY12E subsidy. We retain
Buy on HPCL.
Earlier EPS estimate on very optimistic subsidy assumption
Our FY11 EPS estimate for HPCL was earlier based on optimistic assumption
of subsidy hit of R&M companies of just Rs45bn. Their subsidy hit would have
been as high as Rs111bn if upstream share was 33%. However, with upstream
share up to 38.7% R&M companies’ subsidy will be just Rs69bn, which is still
higher than our assumption. We therefore have cut our estimate of HPCL’s FY11
EPS by 11%.
FY11 EPS up 4% on reported basis; 24% down on recurring
We now estimate FY11E EPS of HPCL at Rs40.1. Our FY11 estimate is 4%
higher than the FY10 reported EPS of Rs38.4. However, it is 24% YoY lower than
its FY10 recurring EPS of Rs53. HPCL’s FY10 reported EPS was lower than
recurring EPS due to hefty provision for mark to market on oil bonds.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindustan Petro.
FY11E EPS estimated at
Rs40.1; could have been worse
„Cut FY11 EPS by 11%; cut could have been lot steeper
FY11 subsidy sharing has been finalized. The main surprise was that upstream
companies’ share in FY11 subsidy was raised to 38.7% as against the expected
33.3%. Rise in upstream share in subsidy to 38.7% meant R&M companies’ share
in subsidy is 8.8%. R&M companies like HPCL have thus gained from the rise in
upstream share in subsidy but their subsidy hit is still higher than our optimistic
assumption. We therefore cut our estimate of HPCL’s FY11E EPS by 11% to
Rs40.1. However, its FY11E EPS could have been far lower at Rs22.8 if
upstream share in subsidy was 33% and R&M had to bear 14%. HPCL is
inexpensive in our view, trading at its FY11 book value (P/BV at 0.97). A
near term trigger is likely to be fuel price hike to cut FY12E subsidy. We retain
Buy on HPCL.
Earlier EPS estimate on very optimistic subsidy assumption
Our FY11 EPS estimate for HPCL was earlier based on optimistic assumption
of subsidy hit of R&M companies of just Rs45bn. Their subsidy hit would have
been as high as Rs111bn if upstream share was 33%. However, with upstream
share up to 38.7% R&M companies’ subsidy will be just Rs69bn, which is still
higher than our assumption. We therefore have cut our estimate of HPCL’s FY11
EPS by 11%.
FY11 EPS up 4% on reported basis; 24% down on recurring
We now estimate FY11E EPS of HPCL at Rs40.1. Our FY11 estimate is 4%
higher than the FY10 reported EPS of Rs38.4. However, it is 24% YoY lower than
its FY10 recurring EPS of Rs53. HPCL’s FY10 reported EPS was lower than
recurring EPS due to hefty provision for mark to market on oil bonds.
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