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P r o f i t s a b o v e e s t i m a t e o n l o w e r s u b s i d y b u r d e n …
Hindustan Petroleum Corp (HPCL) declared its Q4FY11 results with
revenues of | 39,892.2 crore, EBITDA of | 2200.5 crore and PAT of |
1122.7 crore. The profitability was above our estimates mainly on account
of higher refining margins and lower net under-recoveries. The
downstream companies shared lower net subsidy burden of 8.8% in FY11
against 12.2% in FY10. This got reflected in the current quarterly results.
Higher inventory gain of | 385 crore (US$2.7 per barrel) increased the
refining margins to US$8.55 per barrel in Q4FY11. We have increased our
Brent crude oil price estimates to US$100 per barrel, going forward vs.
our earlier estimate of US$85 per barrel. We have also assumed net
under-recoveries for downstream companies at 8.8% each in FY12E and
FY13E. This would increase our EPS estimates to | 49.1 and | 50.7 in
FY12E and FY13E, respectively. We recommend a HOLD rating on the
stock with a price target of | 391.
ƒ Highlights of the quarter
Crude oil throughput increased 10.4% YoY from 3.9 MMT in Q4FY10
to 4.3 MMT in Q4FY11 on account of higher capacity utilisation from
the Vishakhapatnam refinery. The gross refining margins (GRMs)
increased from US$3.2 per barrel in Q4FY10 to US$8.6 per barrel in
Q4FY11 on account of inventory gain of | 385 crore (US$2.7 per
barrel). Total market sales increased 10.9% YoY from 6.5 MMT in
Q4FY10 to 7.2 MMT in Q4FY11. Lower net subsidy burden of 8.8%
in FY11 against 12.2% in FY10 for downstream companies led to
over-recoveries of | 751 crore in Q4FY11.
V a l u a t i o n
HPCL is trading at 7.6x FY12E and 7.3x FY13E EPS of | 49.1 and | 50.7,
respectively. We recommend the stock with a HOLD rating and a price
target of | 391 (valuation based on average of P/BV multiple: | 345 per
share and P/E multiple: | 437 per share).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P r o f i t s a b o v e e s t i m a t e o n l o w e r s u b s i d y b u r d e n …
Hindustan Petroleum Corp (HPCL) declared its Q4FY11 results with
revenues of | 39,892.2 crore, EBITDA of | 2200.5 crore and PAT of |
1122.7 crore. The profitability was above our estimates mainly on account
of higher refining margins and lower net under-recoveries. The
downstream companies shared lower net subsidy burden of 8.8% in FY11
against 12.2% in FY10. This got reflected in the current quarterly results.
Higher inventory gain of | 385 crore (US$2.7 per barrel) increased the
refining margins to US$8.55 per barrel in Q4FY11. We have increased our
Brent crude oil price estimates to US$100 per barrel, going forward vs.
our earlier estimate of US$85 per barrel. We have also assumed net
under-recoveries for downstream companies at 8.8% each in FY12E and
FY13E. This would increase our EPS estimates to | 49.1 and | 50.7 in
FY12E and FY13E, respectively. We recommend a HOLD rating on the
stock with a price target of | 391.
ƒ Highlights of the quarter
Crude oil throughput increased 10.4% YoY from 3.9 MMT in Q4FY10
to 4.3 MMT in Q4FY11 on account of higher capacity utilisation from
the Vishakhapatnam refinery. The gross refining margins (GRMs)
increased from US$3.2 per barrel in Q4FY10 to US$8.6 per barrel in
Q4FY11 on account of inventory gain of | 385 crore (US$2.7 per
barrel). Total market sales increased 10.9% YoY from 6.5 MMT in
Q4FY10 to 7.2 MMT in Q4FY11. Lower net subsidy burden of 8.8%
in FY11 against 12.2% in FY10 for downstream companies led to
over-recoveries of | 751 crore in Q4FY11.
V a l u a t i o n
HPCL is trading at 7.6x FY12E and 7.3x FY13E EPS of | 49.1 and | 50.7,
respectively. We recommend the stock with a HOLD rating and a price
target of | 391 (valuation based on average of P/BV multiple: | 345 per
share and P/E multiple: | 437 per share).
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