1:2 Bonus, Upcoming Rs 11/Sh Dividend, Record Date In 2 Days; BUY Maharatna PSU OMC Stock, Highest TP Rs 475

Hindustan Petroleum’s (HPCL) share price is in focus this week ahead of turning ex-dividend on Friday, August 9, 2024, for its dividend reward of Rs 11 per share which is final for FY24. This dividend comes after the company recently allotted bonus shares in the ratio of 1:2. Brokerages are broadly bullish on HPCL shares after its Q1FY25 earnings.

HPCL stock ended at Rs 386.10 apiece, down by 0.63% on August 6, with a market cap of Rs 82,155.23 crore. The stock is still near its 52-week high of Rs 406.65 apiece, while the stock has more than doubled from its 52-week low of Rs 159.58 apiece

HPCL Dividend, Bonus Issue:

HCPL has fixed Friday, August 9, 2024, as the record date for its final dividend payout of Rs 11 per equity share for the Financial Year ended March 31, 2024. In its regulatory filing, HPCL said that the dividend so declared will be paid to those Members whose names appear in the Register of Members/list of Beneficial Owners as provided by the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL) as on the Record date i.e., August 09, 2024.

HPCL BUY/SELL? Emkay Global On HPCL Share:

The management indicated that the Vizag bottom upgradation would commission by Q3FY25, with peak benefit of ~US$3/bbl on GRMs. First crude at Barmer is starting by Q4-end. We retain our positive stance on HPCL, encouraged by stable macros, a better marketing outlook, and value unlocking in lubes. We tweak FY25-26E EPS by 2% each, adjusting GRMs and marketing margins. We retain BUY on the stock, with 19% higher Sep-25E TP of Rs475/sh on roll-over, and a higher target EV/EBITDA of 6.5x (from 6.0x).

Motilal Oswal On HPCL Share: .

HPCL remains our preferred pick among the three OMCs. We model a marketing margin of INR3.3/lit for both MS and HSD in FY25-26E, while the current MS/HSD marketing margins are INR6.9/lit and INR4.9/lit, respectively. We see the following as key catalysts for the stock: 1) demerger and potential listing of lubricant business, 2) the commissioning of its bottom upgrade unit, and 3) the start of its Rajasthan refinery in 4QFY25’end. We reiterate our BUY rating on the stock, valuing it by SoTP method to arrive at our TP of INR460. The start-up of the Rajasthan refinery (HRRL; HPCL has 74% stake) can be a key catalyst in FY26, in our opinion.

Nirmal Bang On HPCL Share:

We maintain ACCUMULATE on revised TP (raised by 7.8%) at a higher PE of 6.2x on June’26E vs the old PE of 5.6x on FY26E (FY14-FY18 avg PE) ~10% higher as lower crude prices imply higher Retail margins and HPCL gains more as it depends more on outsourced volume for sales. This also includes the hit on TP due to HRRL loss in FY26E. We have cut FY25E/FY26E EPS by 43.8%/5.4%. The steep cut in FY25 is due to the 1QFY25 hit on LPG at Rs23.45bn, and the cut in GRM & Retail margins. We have also trimmed FY26E as the higher Retail margins supported by 18.4% YoY decline in FY26E oil forecast is offset by clipped GRM.

Our reduced GRM is due to the higher risk for HPCL from volatility in crude and fuel spreads, especially in Vizag due to long shipping time. Why neutral? The stock’s massive rally of 112% in the last one year has priced in the upside from Vizag expansion/upgradation. There is also risk to GRMs/potential inventory loss – as per our declining crude forecast of US$65/bbl by FY26 and concerns over ad-hoc government intervention in Retail pricing freedom. The Lubricants business hive-off and CGD ramp-up are the potential long term catalysts.

Global Brokerages on HPCL:

Jefferies has maintained underperform on HPCL share, but raised its target price to 315 per share with Neutral outlook. Meanwhile, Citi maintained BUY on HPCL for target price of Rs 420 with Neutral outlook. HPCL has reported Standalone Revenue from Operations of ₹ 1,20,859 crore during 1QFY25 (₹ 1,19,044 crore during 1QFY24). The Company’s Consolidated Profit after Tax (PAT) during this quarter is ₹ 634 crore (₹ 6,766 crore during 1QFY24).

The Standalone PAT during this quarter is ₹ 356 crore (₹ 6,204 crore during 1QFY24). The primary reasons for lower PAT are suppressed marketing margins on select petroleum products and reduced refining margins. Average GRMs for 1QFY25 were US$ 5.03 per barrel (US$ 7.44 per barrel during 1QFY24). The reduction in GRMs is primarily due to lower cracks in line with the trend of international product cracks.

Leave a Comment