HPCL Result below estimates BUY :Emkay,

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HPCL

Result below estimates

BUY

CMP: Rs 337                                       Target Price: Rs 463

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n     HPCL reported results which were below our estimates with EBIDTA loss at Rs.26.8bn and Net loss at Rs.33.6bn, revenue grew by 20.2% to Rs.371bn

n     Direct market sales grew by 15% YoY to 6.94mmt, while crude throughput increased by 37.8% YoY to 4.2mmt

n     Average gross refining margin for Q2 FY12 was at $1.9/bbl as compared to $2.7/bbl, declined by 27.5% YoY, however GRM grew by 76.8% sequentially

n     Valuations look attractive at 0.7x FY13E ABV, continue BUY rating with TP of Rs.463