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Hindustan Petroleum (BOM:500104) |
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WIKI ANALYSIS
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HPCL
Hindustan Petroleum Corporation Limited (HPCL) is the third largest oil refining and marketing company in India. Apart from the 13 MMTPA (million tonnes per annum) of refining capacity, it has strong retail presence with over 8,500 retail outlets spread across the country. Further, the company has nearly 27 m customers in the fast growing LPG business. The company has stakes in HPCL-Mittal Energy (49%), MRPL (17%), Bhagyanagar Gas (25%) and Aavantika Gas (25%).
During FY09, HPCL’s average gross refining margin was US$ 3.97 per barrel as compared to US$ 6.54 per barrel during FY08. During the year, Mumbai refinery achieved crude throughput of 6.65 m tonnes, while the Visakh refinery achieved a crude throughput of 9.16 m tonnes. In terms of volumes, market sales were 25.39 million metric tonnes during FY09. The company’s refining margin during the fiscal was lower on account of the decline in the global crude oil prices, which resulted in inventory losses. The company faced under recoveries on product prices, which could not be fully passed on to the consumers. Upstream oil companies, i.e. ONGC and GAIL partially compensated for the under recoveries by providing discounts amounting to Rs 71.8 bn, while the Government of India issued oil bonds to the tune of Rs 146.9 bn.
While volume off take is likely to remain robust going forward, the company’s financial performance will depend on crude oil prices, rupee-dollar exchange rates, interest costs and most importantly, government regulations of product prices.
| Financial performance: A snapshot | ||||||
|
(Rs m) | 4QFY08 | 4QFY09 | Change | FY08 | FY09 | Change |
|---|---|---|---|---|---|---|
| Net sales | 314,706 | 253,637 | (19.40%) | 1,047,038 | 1,251,379 | 19.50% |
| Expenditure | 312,538 | 197,168 | (36.90%) | 1,031,498 | 1,218,818 | 18.20% |
| Operating profit (EBDITA) | 2,168 | 56,470 | 15,540 | 32,561 | 109.50% | |
| EBDITA margin (%) | 0.70% | 22.30% | 1.50% | 2.60% | ||
| Other income | 3,177 | 2,167 | (31.80%) | 11,980 | 5,202 | (56.60%) |
| Interest | 3,009 | 3,779 | 25.60% | 7,925 | 20,828 | 162.80% |
| Depreciation | 2,532 | 2,545 | 0.50% | 8,508 | 9,813 | 15.30% |
| Profit before tax | (196) | 52,313 | 11,087 | 7,122 | (35.80%) | |
| Tax | (4,041) | 1,273 | (262) | 1,373 | ||
| Profit after tax/(loss) | 3,845 | 51,040 | 11,349 | 5,750 | (49.30%) | |
| Net profit margin (%) | 1.20% | 20.10% | 1.10% | 0.50% | ||
| No. of shares (m) | 339 | |||||
| Diluted earnings per share (Rs) | 17 | |||||
| Price to earnings ratio (x) | 18 | |||||
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