Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
HPCL: Takes it on the chin - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 19, 2002

    HPCL: Takes it on the chin

    The disinvestment buzz around the Hindustan Petroleum Corporation Ltd. (HPCL) scrip seems to have diverted investor attention from the dismal quarterly performance reported by the company. The slowdown in economy that gained grip over the past three quarters has considerably impacted the company. Over this period, the slide in sales has become more precipitous.

    (Rs m) 3QFY01 3QFY02 Change 9mFY01 9mFY02 Change
    Net Sales 123,369 99,930 -19.0% 333,037 300,030 -9.9%
    Other Income 723 496 -31.4% 1,726 1,917 11.0%
    Expenditure 117,707 97,466 -17.2% 319,174 290,306 -9.0%
    Operating Profit (EBDIT) 5,662 2,464 -56.5% 13,863 9,723 -29.9%
    Operating Profit Margin (%) 4.6% 2.5%   4.2% 3.2%  
    Interest 1,088 709 -34.8% 2,898 2,242 -22.6%
    Depreciation 1,114 1,278 14.8% 3,176 3,722 17.2%
    Profit before Tax 4,184 973 -76.7% 9,515 5,676 -40.4%
    Tax 800 365 -54.4% 1,900 2,045 7.6%
    Profit after Tax/(Loss) 3,384 608 -82.0% 7,615 3,631 -52.3%
    Net profit margin (%) 2.7% 0.6%   2.3% 1.2%  
    No. of Shares 339 339   339 339  
    Diluted Earnings per share* 39.9 7.2   30.0 14.3  
    P/E Ratio   35.1     17.7  

    At the topline, performance of the company is in line with it's peer Bharat Petroleum (BPCL) for the concerned periods. The company has managed to marginally improve volume sales (2.9%), which is encouraging considering that more than 50% of sales is from middle distillates. This category of petroleum products i.e. diesel and kerosene have experienced the steepest declines in consumption. The company has been hit by lower realisations on petroleum products. The drying up of demand has led to prices collapsing internationally. Realisation in domestic markets are down by an estimated 21%, which would be higher in dollar terms. For the nine month period, both volume and realisations are down, impacting turnover.

    The drop in sales accompanied with lower margins has considerably impacted the operating performance of the company with profits down sharply. For 3QFY02, at the operating level, the company has been outperformed by BPCL, which managed to protect margins leading to higher operating profits. For 9mFY02, BPCL too reported a 19% slide in operating profits. As compared to the corresponding period last fiscal, oil markets softened considerably in the third quarter. Oil prices, which were trading at an estimated $30/ barrel cooled down to an estimated $22/ barrel. This has pulled down raw material costs. Also, products for re-sale cost has declined substantially due to the sharp slide in petroleum product prices, as compared to crude oil. This is reflected in the lower operating margins of the company, which continued to be under pressure. That said, products for re-sale grew faster than throughput, which could indicate that with refining margins (GRMs) dwindling, the company found it more feasible to build merchant sales.

    At Rs 246 the scrip is trading on a multiple of 17.7x 9mFY02 annualised earnings. This is comparatively high considering the stock trades in a P/E band of 4x - 8x earnings. Revaluation of marketing assets by the street post IBP divestment, impending dismantling & deregulation in the sector accompanied with expected disinvestment has led to investors according a higher value to the stock.



    Equitymaster requests your view! Post a comment on "HPCL: Takes it on the chin ". Click here!


    More Views on News

    GAIL: A Good Show (Quarterly Results Update - Detailed)

    Mar 27, 2017

    GAIL (India) Ltd has announced results for the quarter ended December 2016. reported 9.4% year on year (YoY) decline in sales, while bottom-line grew 45.4% YoY.

    ONGC: Higher Realisations on Crude Support Performance (Quarterly Results Update - Detailed)

    Mar 17, 2017

    ONGC has announced results for the quarter ended December 2016. The company has reported 9.2 % year on year (YoY) growth in sales, while bottom-line grew 197% YoY.

    HPCL: A loss making quarter (Quarterly Results Update - Detailed)

    Dec 29, 2015

    HPCL has reported 18.6% YoY decline in the topline and losses worth Rs 3.2 bn at the bottomline level in the quarter ended June 2015.

    HPCL: Higher GRMs boost profit (Quarterly Results Update - Detailed)

    Sep 8, 2015

    HPCL has reported 12.6% YoY decline in the topline while bottomline grew by around 34.5 times (YoY) in the quarter ended June 2015.

    Mahanagar Gas Ltd (IPO)

    Jun 21, 2016

    Should one subscribe to Mahanagar Gas IPO?

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 22, 2017 (Close)



    Detailed Quarterly Results With Charts