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L o w e r r e f i n i n g m a r g i n s d r a g b o t t o m l i n e …
Hindustan Petroleum Corp (HPCL) declared its Q1FY12 results with
revenues of | 40916.9 crore, EBITDA loss of | 2568.4 crore and net loss of
| 3080.3 crore. The results were below our estimates mainly on account
of a sharp drop in refining margins and higher net under-recoveries. The
downstream companies shared a net subsidy burden of 32.3% (| 14088.6
crore) in Q1FY12. Lower inventory gain of | 218 crore and changes in
customs duty structure led to a sharp decline in the refining margins to
US$1.1 per barrel in Q1FY12. The interest cost stood at | 264.1 crore in
Q1FY12 increasing significantly by 34.2% YoY. We have maintained our
Brent crude oil prices estimates of US$100 per barrel, going forward. We
have assumed net under-recoveries for downstream companies at 8.8%
in FY12E and FY13E. We estimate HPCL will report EPS of | 41.2 and |
54.8 in FY12E and FY13E, respectively. We recommend a BUY rating on
the stock with a price target of | 472.
ƒ Highlights of the quarter
The crude oil throughput increased 20.7% YoY from 3.3 MMT in
Q1FY11 to 4.0 MMT in Q1FY12 on account of higher capacity
utilisation from the both Mumbai and Visakh refinery. The gross
refining margins (GRMs) dropped significantly from US$3.7 per
barrel in Q1FY11 to US$1.1 per barrel in Q1FY12 on account of
lower inventory gain of | 218 crore and changes in customs duty
structure. The total market sales increased 8% YoY from 6.7 MMT in
Q1FY11 to 7.3 MMT in Q1FY12. The net subsidy burden for
downstream companies in this quarter was 32.32% in Q1FY12,
which led to net under-recoveries of | 3060 crore in Q1FY12.
V a l u a t i o n
HPCL is trading at 9.2x FY12E and 6.9x FY13E EPS of | 41.2 and | 54.8,
respectively. We recommend the stock with a BUY rating and a price
target of | 472 (valuation based on average of P/BV multiple: | 439 per
share and P/E multiple: | 505 per share).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r r e f i n i n g m a r g i n s d r a g b o t t o m l i n e …
Hindustan Petroleum Corp (HPCL) declared its Q1FY12 results with
revenues of | 40916.9 crore, EBITDA loss of | 2568.4 crore and net loss of
| 3080.3 crore. The results were below our estimates mainly on account
of a sharp drop in refining margins and higher net under-recoveries. The
downstream companies shared a net subsidy burden of 32.3% (| 14088.6
crore) in Q1FY12. Lower inventory gain of | 218 crore and changes in
customs duty structure led to a sharp decline in the refining margins to
US$1.1 per barrel in Q1FY12. The interest cost stood at | 264.1 crore in
Q1FY12 increasing significantly by 34.2% YoY. We have maintained our
Brent crude oil prices estimates of US$100 per barrel, going forward. We
have assumed net under-recoveries for downstream companies at 8.8%
in FY12E and FY13E. We estimate HPCL will report EPS of | 41.2 and |
54.8 in FY12E and FY13E, respectively. We recommend a BUY rating on
the stock with a price target of | 472.
ƒ Highlights of the quarter
The crude oil throughput increased 20.7% YoY from 3.3 MMT in
Q1FY11 to 4.0 MMT in Q1FY12 on account of higher capacity
utilisation from the both Mumbai and Visakh refinery. The gross
refining margins (GRMs) dropped significantly from US$3.7 per
barrel in Q1FY11 to US$1.1 per barrel in Q1FY12 on account of
lower inventory gain of | 218 crore and changes in customs duty
structure. The total market sales increased 8% YoY from 6.7 MMT in
Q1FY11 to 7.3 MMT in Q1FY12. The net subsidy burden for
downstream companies in this quarter was 32.32% in Q1FY12,
which led to net under-recoveries of | 3060 crore in Q1FY12.
V a l u a t i o n
HPCL is trading at 9.2x FY12E and 6.9x FY13E EPS of | 41.2 and | 54.8,
respectively. We recommend the stock with a BUY rating and a price
target of | 472 (valuation based on average of P/BV multiple: | 439 per
share and P/E multiple: | 505 per share).
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