HPCL- Cash compensation inadequate BUY :: Emkay

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HPCL

Cash compensation inadequate

BUY

CMP: Rs 384                                       Target Price: Rs 463

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n     HPCL reported results which were above our estimates with EBIDTA loss at Rs.25.6bn and Net loss at Rs.30.8bn, revenue grew by 39.6% to Rs.409bn

n     Direct market sales grew by 8% to 7.27mmt, while crude throughput increased by 20.7% YoY to 3.97mmt

n     Average gross refining margin for Q1 FY12 was at $1.09/bbl as compared to $3.72/bbl, declined by 70.7% YoY and 87% sequentially

n     Valuations look attractive at 0.8x FY13E ABV, continue BUY rating with TP of Rs.463