HPCL advances 4% as Q1 pre-tax profit leaps 140% YoY to Rs 3,120 crore

Shares of Hindustan Petroleum Corporation (HPCL) gained 4.2 per cent to Rs 225 on the BSE on Friday after the state-run oil refiner's consolidated profit before tax (PBT) more-than-doubled for the first quarter (Q1) of 2020-21 to Rs 3,119.7 crore, compared to Rs 1,301.4 crore during the April-June period of 2019-20 (FY20) — up 140 per cent. The rise in PBT was mainly owing to inventory gains and higher capacity utilisation in refineries. 

The stock, however, erased gains and was quoting 0.74 per cent lower at Rs 215 apiece on the BSE at 10:34 am. In comparison, the S&P BSE Sensex was at 37,978.34 level, down 47 points or 0.12 per cent. A combined 11.5 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.

The company also got benefits from lower crude oil prices during the quarter. The gross sales for the period under review saw a drop of 38 per cent, from Rs 45,945.48 crore, against Rs 74,595.64 crore Q1FY20. 

In Q1, HPCL had posted an inventory gain of Rs 633 crore, compared to an inventory loss of Rs 536 crore during the same period last year. The combined gross refining margin (GRM) during the April-June period saw a negative of $0.04 a barrel, compared to $0.75 a barrel in the corresponding period of last year. The weaker trend on product cracks continued to keep GRMs suppressed.

That apart, HPCL achieved domestic sales volume of 7.24 million tonnes (mt) in Q1FY21, against 9.82 mt in the previous year for the same period, representing degrowth of 25.8 per cent, against degrowth of 29.2 per cent for state-run oil marketing companies. During the quarter, sales of domestic packed liquefied petroleum gas increased 24.7 per cent. On the other hand, petrol and diesel reduced by 37 per cent and 32.4 per cent, respectively, compared to the same period last year.

"The Covid-19 pandemic is globally inflicting high economic and human costs causing a slowdown of economic activity. Specific to the Corporation, it did have an impact on the sales of the Corporation in the months of April and May 2020, though substantial recovery is seen in June 2020," HPCL said in its BSE filing.

The company expects to go ahead with its committed projects. "The Corporation has adequate fund based limits with consortium as well as non-consortium banks apart from an option to tap other resources for meeting its fund requirements, as such there are no liquidity concerns," it said.