Hindustan Petroleum Corporation Limited (HPCL) shares have been on a roll, surging nearly 26% in the last ten straight sessions, which is its longest gaining streak since May this year, when it maintained uptrend for 11 trading sessions. The shares of state-owned oil marketing company (OMC) is hovering around its 52-week high of ₹309.85 touched on July 26, 2023. The recent rally in HPCL shares can be attributed to ease in global crude prices, decent September quarter results and positive call on the stock by some analysts.
On Thursday, HPCL shares opened a tad higher at ₹299.55 against the previous closing price of ₹299.20 on the BSE. During the session, the oil heavyweight gained as much as 1.8% to hit an intraday high of ₹304.50, while the market capitalisation rose to ₹42,471 crore.
At the current level, HPCL share trades 49% higher than its 52-week low of ₹204.25 touched on November 9, 2022, while it is down nearly 2% from its 52-week high of ₹309.85 mark.
In the last one year, HPCL shares have delivered 46% returns to its shareholders, while it surged over 26% in the calendar year 2023. The PSU stock rose 17% in six months and nearly 19% in a month.
In the July-September quarter of FY24, HPCL turned profitable and posted consolidated net profit of ₹5,826.96 crore as compared to loss of ₹2,475.69 crore in the same period last year, driven by low crude prices and higher gross refining margin (GRM). However, the profit fell 14% sequentially from ₹6,765.50 in Q1 FY24.
The profit dropped sequentially as crude oil prices rose during the quarter amid supply constraints and geopolitical tensions. Brent crude oil averaged at around $87 per barrel in the July-September quarter, up 11% from the June quarter of the current fiscal.
HPCL’s revenue dropped nearly 10% to ₹1.02 lakh crore, compared to ₹1.13 lakh crore in the corresponding period last year.
On the operating front, the Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) declined 15% to ₹9,280.36 crore, versus ₹10,944.82 crore in Q1FY24.
Refining margins and gross marketing margins (GMM) stood at US$13.3 per barrel and ₹5.9 per liter.
Post Q2 results, ICICI Securities retained ‘Buy’ rating on HPCL shares with a target price of ₹365, a potential upside of 31% from current market price. “With steep growth likely in refinery throughput (15mt expansion by FY25E), improving marketing margins and reducing leverage, the stock is likely to show strong outperformance over the next 12-18 months,” it says in a report.
Another domestic brokerage Prabhudas Lilladher assigned ‘Hold’ rating with a price target of ₹272 per share from ₹263 estimated earlier. “On account of weakening Singapore GRMs and inability to pass on increase in fuel costs coupled with upcoming elections, we maintain ‘Hold’ rating with a TP of Rs272 (earlier Rs263) based on 0.7x FY26 P/BV,” it says in its report.
In the post-earnings call with analysts, HPCL disclosed that the company plans to invest ₹75,000 crore over the next 5 years, split up into 25-30% in renewables, 20-25% in refining space and balance on marketing. Out of this, the company has already incurred capital expenditure of ₹37,000 crore. The company has formed a wholly-owned subsidiary for green business which will spearhead its foray into renewables, EV & hydrogen segments and crude to chemicals.
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