HPCL dips on profit booking post Q1 results

The stock dipped 6% to Rs 1,144 on the BSE in intra-day trade.

Hindustan Petroleum Corporation (HPCL) has dipped 6% to Rs 1,144 on the BSE in intra-day trade on profit booking after recent gains ahead of its June quarter earnings. The company reported 30% growth in net profit at Rs 2,098 crore for the quarter ended June 30, 2016 (Q1FY17). The state-run refinery company had profit of Rs 1,614 crore during the same period last year.

The company’s net revenue fell 5.7% to Rs 51,661 crore, compared to Rs 54,822 crore during the previous year quarter. The average gross refining margin (GRM) in Q1FY17 was $6.83 per barrel, compared to $8.56 per barrel in Q1FY16, HPCL said in statement.

In past two-weeks, the stock corrected 14% from its 52-week high of Rs 1,329 touched on August 9, during intra-day trade.

Earlier, post announcement of 2:1 bonus shares on July 20, the stock outperformed the market by gaining 17%, as compared to 1% rise in the benchmark S&P BSE Sensex till August 8.

“HPCL’s GRMs stood at US$ 6.83/bbl, outperforming the Singapore complex benchmark by US$ 1.83/bbl. However, the reason for this outperformance is unclear due to limited data available currently. Note that the recent crash in Singapore complex GRMs to US$ 3.5/bbl driven by a decline in light distillate spreads could hit HPCL’s GRMs the most among OMCs,” Religare Institutional Research said in results review.

“While refining margins would continue to be cyclical, marketing profitability will be stable led by retail pricing power. We believe HPCL is now a structural investment play - led by higher earnings predictability and increase in profitability leading to higher return on equity (RoEs),” said Motilal Oswal Securities in report. The brokerage house maintains ‘buy’ rating on the stock with target price of Rs 1,490.

At 02:46 pm, the stock was down 5.4% at Rs 1,149 on the BSE, as compared to 0.26% fall in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 5.65 million shares changed hands on the BSE and NSE so far.