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Informist, Monday, Jul 29, 2024

--HPCL: Apr-Jun net profit down due to lower refining margins 

--HPCL: Apr-Jun net profit down as marketing margins suppressed 

--HPCL Apr-Jun average GRM $5.03/bbl vs $7.44/bbl year ago

--HPCL Apr-Jun crude throughput 5.76 mln tn vs 5.40 mln tn year ago 

--HPCL Apr-Jun pipeline throughput 6.83 mln tn vs 6.49 mln tn year ago 

--HPCL: Invested 20.17 bln rupees on refining, marketing infra Apr-Jun 

--HPCL says commissioned 126 retail outlets in Apr-Jun 

--HPCL: Total retail outlets 22,148 as on Jun 30 

MUMBAI – Hindustan Petroleum Corp Ltd's net profit during the June quarter came in significantly lower than analysts' estimates. The company said lower refining margins and suppressed marketing margins were the primary reasons behind the sharp fall.

The company's average gross refining margins fell 32% on year to $5.03 per barrel, as against $7.44 per bbl a year ago. It was also down compared to $6.95 per barrel in Jan-Mar. The fall in GRMs led to HPCL's net profit falling 94% on year and 87% on quarter to 3.56 bln rupees. This was sharply lower than the 12.21 bln rupees, the average of estimates from 10 brokerages. Analysts were extremely divided over the exact quantum of net profit for HPCL with estimates in the range of 5.55 bln-20.0 bln rupees.

HPCL said refining margins were weak during the quarter due to lower product cracks as witnessed globally. Moreover, analysts had forecast a hit to the company's marketing margins due to a price cut of 2 rupees per ltr in retail fuel prices in March. 

Crude product cracks are defined as the difference between the price of crude oil and the price of refined products. Gross refining margin is the difference between the price of crude oil and the total value of petroleum products produced by a refinery on a per-barrel basis. It is a key indicator of a refinery's efficiency and profitability.

The quarterly earnings came out post market hours today. Investors now await HPCL management's comments during analysts' call, which is scheduled on Tuesday at 1200 IST.

The sharp decline in profits comes despite the company reporting better revenue during the quarter than a year ago. Its revenue from operations--net of excise duty--rose 1.6% to 1.14 trln rupees. This was below the Street's expectation, which had forecast the revenue at 1.15 bln rupees.

The company's revenue was boosted by higher sales volume, which rose 6.6% on year to 12.63 mln tn in Apr-Jun. Within this, its sales of motor fuels rose nearly 3% on year to 8.02 mln tn and sales of liquified petroleum gas increased 9% to 2.07 mln tn. Its relatively smaller businesses of aviation fuel reported 31% growth in volumes, and lubricants products' volumes grew 3%. This helped HPCL gain market share of 0.25% in Apr-Jun among oil marketing companies in the public sector, the company said.

Among other metrics, its crude throughput rose 6.7% on year to 5.76 mln tn, and pipeline throughput increased 5.2% to 6.83 mln tn. Its crude throughput was higher despite planned shutdown in refiners, the company said.

The company's expenses during the quarter rose much faster than its revenue, impacting profits. The overall expenses rose 8.6% on year to 1.21 trln rupees. This increase was largely due to higher material cost--which includes cost of materials consumed, purchase of stock-in-trade, and changes in inventories. The material cost increased nearly 10% on year to 1.06 trln rupees.  

Updating on expansion plans, the company said it spent 20.17 bln rupees during the quarter on improving its refining and marketing infrastructure. Its refinery and petrochemical plant at Barmer, Rajasthan, has achieved physical progress of over 80%, the company said. The refinery in Barmer is set to have a capacity of 9 mtpa, and it will be the company's third refinery after those in Mumbai and Visakhapatnam. Apart from this, the company commissioned 126 retail outlets in Apr-Jun, increasing its total number of outlets to 22,148 as on Jun 30.

Today, shares of HPCL closed 1.2% higher at 381.05 rupees on the National Stock Exchange.  End

Reported by Anshul Choudhary

Edited by Deepshikha Bhardwaj

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