HPCL gets board nod to raise ₹10,000 cr via debt; stock down 3%

Shares of Hindustan Petroleum Corporation Limited (HPCL) dropped nearly 2% in early trade on Friday even after the state-owned oil marketing company received its board approval to raise up to ₹10,000 crore via debt market to fund its oil refining and fuel marketing operations. The fall in shares was in line with the oil and gas index with most energy heavyweights reeling under selling pressure, in sync with the benchmark Sensex.

HPCL share price opened a tad higher at ₹247, against the previous closing price of ₹246.60 on the BSE, and rose as 0.8% to ₹249 in opening deals. The stock soon pared gains and declined as much as 3.2% from the day’s high to hit a low of ₹241.05, while market capitalisation (m-cap) slipped to ₹34,272 crore.

In comparison, the BSE Oil & Gas index was down 0.4%, led by Indraprastha Gas (IGL), Gujarat Gas, Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation (IOC), and Petronet LNG. IGL topped the losers’ chart by falling nearly 4%.

Bucking the trend, GAIL (India), Reliance Industries, Adani Total Gas, and Oil and Natural Gas Corporation (ONGC) were trading higher after the government cut windfall tax on domestically produced crude and diesel exports in the backdrop of ease in global oil prices. The windfall tax or special additional excise duty (SAED) on domestic crude oil has been reduced to ₹1,700 per tonne from ₹4,900 per tonne.

HPCL in an exchange filing on Thursday said it will raise up to ₹10,000 crore through debt on private placement basis in the domestic market or overseas market. “The board of directors of the company at its meeting held on December 15, 2022 approved a proposal for borrowing through further issuance of secured/unsecured redeemable nonconvertible debentures/bonds/notes etc. up to ₹10,000 crores on private placement basis in the domestic market and/or in the overseas market from the date of such approval,” it said in the BSE filing.

“The borrowing of funds is within the overall borrowing powers of the company for which approval of the shareholders was already obtained in the 70th Annual General Meeting of the company held on August 30, 2022,” it added.

In a separate development, the oil company raised ₹750 crore through issue of debentures on a private placement basis to refinance "existing borrowing and/or funding of capial expenditure". It issued 7,500 10-year debentures at an issue price of ₹10,00,000 apiece (at par with face value). The date of allotment of the issue is December 15 and the date is maturity is fixed as of April 15, 2033, while it carries a coupon rate of 7.54% per annum.  The issue is proposed to be listed on BSE Limited & NSE.

For the July-September quarter (Q2FY23), HPCL reported a consolidated net loss of ₹2,475.69 crore, compared to a profit of ₹1,918.89 crore in the same period last year. On the quarter-on-quarter (QoQ), the loss narrowed from ₹8,557.12 crore in Q1FY23. The second quarter earnings were aided by around ₹5,600 crore of accrued LPG subsidy which was paid by the central government during the quarter under review. This is for the first time that HPCL posted a back-to-back quarterly loss amid a continued decline in margins due to the freezing of retail fuel prices.

However, consolidated total income increased to ₹114,497.65 crore in Q2FY23, from ₹88,299.19 crore in Q2FY22. On a sequential basis, the income dropped from ₹121829.51 crore in the June quarter of the current fiscal.

Meanwhile, the average Grass Refining Margin (GRM) for the period April-September 2022 stood at $12.62 per barrel as against $2.87/bbl in the year-ago period. This is before factoring the impact of special additional excise duty.