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Informist, Thursday, Jul 25, 2024

MUMBAI – Hindustan Petroleum Corp Ltd's net profit for the June quarter is expected to fall sharply on year due to lower refining and marketing margins. The cuts in retail fuel prices in March are likely to impact earnings this quarter, analysts said. 

HPCL's net profit in Apr-Jun is seen at 12.21 bln rupees, according to the average of estimates by 10 brokerages. This is over 80% lower than the net profit of 62.04 bln rupees last year and nearly 60% lower than 28.43 bln rupees in Jan-Mar. Brokerages were extremely divided over the exact quantum of net profit with estimates in the range of 5.55-20.0 bln rupees.

Shares of HPCL have risen in the past three months, gaining over 21% during this period. These gains came after four straight months of decline. Today, shares of the company fell 0.4% to 2,707.20 rupees on the National Stock Exchange. HPCL will report its quarterly earnings on Monday.

At the same time, the company's revenue is expected to rise a mere 0.6% on quarter to 1.15 trln rupees, according to the average of estimates by 10 brokerages. This is slightly higher than 1.12 trln rupees reported a year ago. Brokerages' estimates were in the range of 1.06-1.28 trln rupees.

Brokerages expect moderation in gross refining margin to continue in this quarter as well amid sequential decline in key product cracks. Emkay Global Financial Services, Kotak Insitutional Equities, Nirmal Bang Institutional Equities, and Nomura Global Market Research estimates show HPCL's reported GRM in Apr-Jun may come in the range of $4.0-$6.3 per barrel. The average gross refining margin for the company was $6.95 per barrel in Jan-Mar, and $8.49 per barrel in Oct-Dec, and $7.4 per barrel in the June quarter last year.

Apart from this, profitability is expected to be impacted due to a decline in refining margins owing to a price cut of 2 rupees per ltr in retail fuel prices in March. Due to weak margins, most analysts expect the company's operating profit to decline on quarter as well. According to the average of estimates of nine brokerages, the company's earnings before interest, taxes, depreciation, and amortisation is likely to come in at 34.85 bln rupees.

In a positive for the company, analysts expect higher crude throughput owing to increased output from its Visakhapatnam refinery. Nuvama and Kotak Equities expect throughput to rise 7% on year and Nirmal Bang Institutional Equities see the rise at 6.3%. During the June quarter last year, HPCL's crude throughput was 5.4 mln tn.

Following are the estimates for Hindustan Petroleum Corp's Apr-Jun earnings, in mln rupees, from 10 brokerage houses:

End

Reported by Anshul Choudhary

Edited by Akul Nishant Akhoury

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