HPCL (Q3 FY13)

India Infoline News Service | Mumbai |

During the quarter, the government payout towards under recoveries was Rs55.4bn and the upstream contribution was Rs33.4bn. YTD, the net under recoveries for HPCL stood at Rs54.6bn as compared to Rs33.8bn in the same period last year.

CMP Rs318, Target Rs340, Upside 6.9%

HPCL reported net sales growth of 11.3% yoy in Q3 FY13 on back of 2.5% yoy growth in market sales (7.7mmt) and 8.2% surge in product realizations. The budgetary support during the quarter was Rs55.4bn vis-à-vis Rs65.8bn in Q3FY13 and sans the government compensation the growth in topline was higher at 15% yoy. Total crude throughput (Mumbai + Vizag) at 4.22mmt saw strong sequential recovery (+15.6% qoq) post the planned shutdowns taken in H1 FY13. On a yoy basis the throughput was higher by 3.4%.

During the quarter, the government payout towards under recoveries was Rs55.4bn and the upstream contribution was Rs33.4bn. YTD, the net under recoveries for HPCL stood at Rs54.6bn as compared to Rs33.8bn in the same period last year.

Quarterly GRM’s weakened to US$1.9/bbl and company recorded a cumulative GRM of US$1.46/bbl for the first nine months of FY13. The lower GRM’s in the quarter were in line with the weakened product cracks during Q3 FY13 as exhibited by the Singapore GRM’s.

HPCL reported a profit of Rs1,471mn vis-à-vis a profit of Rs27,252mn in Q3 FY12 and a profit of Rs23,271mn in Q2 FY13. HPCL remains to have lowest Refining to Marketing mix among all the oil marketing companies and thereby remains most exposed to the subsidy payout uncertainties. However, the recent government moves on partial de-regulation of diesel and capping of number of subsidized LPG cylinders available to each household will cause marked reduction in gross under recoveries. Nevertheless, sustainability of these reforms in FY14 looks difficult considering that general elections will be round the corner. We continue to rate the stock as Market performer with an upwardly revised 9-month target price of Rs340.

Cost analysis
As a % of net sales Q3 FY13 Q3 FY12 bps yoy Q2 FY13 bps qoq
Material costs 35 30.8 377 20.9 1,362
Purchases 59 54.9 361 68.2 (966)
Personnel Costs 1 1.1 (6) 1.4 (39)
Other overheads 4 5.7 (172) 3.6 39
Total costs 98.0 92.4 560 94.1 396
Source: Company, India Infoline Research

Result table
(Rs mn) Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Net sales 534,139 479,748 11.3 491,298 8.7
Material costs (184,453) (147,564) 25.0 (102,740) 79.5
Purchases (312,784) (263,621) 18.6 (335,132) (6.7)
Personnel costs (5,303) (5,068) 4.7 (6,796) (22.0)
Other overheads (21,093) (27,179) (22.4) (17,491) 20.6
Operating profit 10,506 36,316 (71.1) 29,138 (63.9)
OPM (%) 2.0 7.6 (560) bps 5.9 (396) bps
Depreciation (4,947) (4,368) 13.3 (4,910) 0.7
Interest (6,135) (6,986) (12.2) (3,899) 57.4
Other income 2,046 2,289 (10.6) 2,941 (30.4)
PBT 1,471 27,252 (94.6) 23,271 (93.7)
Adjusted PAT 1,471 27,252 (94.6) 23,271 (93.7)
Adj. PAT margin (%) 0.3 5.7 (541) bps 4.7 (446) bps
Reported PAT 1,471 27,252 (94.6) 23,271 (93.7)
Ann. EPS (Rs) 17.4 321.9 (94.6) 274.9 (93.7)
Source: Company, India Infoline Research
BSE 414.70 [17.20] ([3.98]%)
NSE 414.95 [17.60] ([4.07]%)

***Note: This is a NSE Chart

 

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