Stocks to Buy Today: On 8 November 2023, the financial services firm ICICI Securities published the latest research report on Hindustan Petroleum shares, assigning a ‘buy’ rating to the stock. The comprehensive analysis also provides valuable insights into the company’s financial health.
ICICI Securities is Bullish on Hindustan Petroleum and has recommended a ‘buy’ rating on the stock with a target price of Rs 365. Let’s take a closer look at their recommendations for the Hindustan Petroleum share price target set by ICICI Securities.
Hindustan Petroleum Corporation Limited (HPCL) reported a marginal decrease in its standalone earnings for the second quarter of the financial year 2024, with EBITDA and PAT sliding by 5% and 6% quarter-on-quarter, respectively. However, compared to the same quarter last year, where significant losses were recorded, the company has shown a marked improvement.
The better performance is attributed to a combination of higher refining throughput, increased marketing volumes, and a stronger marketing margin, with the retail margin rebounding from a loss in the previous year to INR 2.9 per litre.
For the first half of FY24, HPCL’s EBITDA surged to INR 169 billion, a substantial rise from the previous year’s corresponding period, prompting upward revisions in the company’s earnings per share forecasts for FY24 and FY25 by 122% and 17%, respectively.
The optimistic projections are backed by anticipated growth in refinery throughput, predicted to expand by 15 million tonnes by FY25, improved marketing margins, and a reduction in leverage. Consequently, the stock is expected to significantly outperform in the next 12 to 18 months, earning a ‘BUY’ recommendation from analysts.
The second quarter saw HPCL achieving a refinery throughput of 5.8 million tonnes with a high utilization rate. Gross refining margins (GRMs) showed a strong quarter-on-quarter and year-on-year increase. The company’s domestic marketing volumes rose slightly, while its export sales saw a more substantial growth. Despite a decrease from the previous quarter, the blended marketing margin improved drastically compared to the loss in the same quarter of the previous year.
The company anticipates continued profitability in the second half of FY24 despite a softening in GRMs, as marketing margins have shown a significant improvement at the start of the third quarter.
HPCL expects to maintain a strong upward trajectory in margins amidst uncertainties in the refining and marketing segments. The forecast for the remainder of FY24 includes more moderate GRMs but stronger retail margins compared to the second quarter. With the Vizag refinery expansion fully factored into the fourth quarter of FY24 and fuel consumption expected to recover in the second half, the company’s performance is looking up.
Additionally, the anticipated commissioning of the Rajasthan Refinery by FY25, which is currently 70% mechanically complete, signals a transformative phase for HPCL in scaling up business and diversifying its business mix in the upcoming three years. These developments underpin a positive outlook for HPCL.
|Shareholding||Mar ’23||Jun ’23||Sep ’23|
|– Mutual Funds and Others||13.1%||13.5%||14.3%|
|– Insurance Companies||8.4%||8.4%||7.9%|
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