Hindustan Petroleum Corporation Ltd. (HPCL) has reported its fourth quarter and full year results. Topline growth has been sliding over the past four quarters. However, in 4QFY02, decline in growth has been less sharp compared to the preceding quarter. Sales are lower due to a combination of lower volumes and realisations.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares
Diluted Earnings per share*
Operating profits have largely been buoyed by better margins during 4QFY02. OPM has increased by 5.7 percentage points during the period. The company seems to have benefited from the softer crude oil prices during the first three months of 2002. Crude oil prices were lower by 16% at 22.4/ barrel. Also, margins seem to have been boosted by oil pool claims. Margins for the full year have been lifted by the last quarter performance. For 9mFY02, OPM was 3.2%. Sale volumes for FY02 are estimated to be lower by 2%, while realisations are lower by 9%. The company seems to have received some respite from a depreciating Rupee.
Having said that, the quality of earning seems to have improved dramatically. Last year's earnings were buoyed largely by other income. A challenging operating environment over the past two years and fresh investments (Guru Gobind Sigh refinery) is likely to have put pressure on cash flows. Consequently, in FY02, other income has suffered. Adjusting for other income, pre-tax profits for the full year would be higher by 10.5%. Deferred tax has also led to lower profits.
At Rs 251, the scrip is trading on a multiple of 10.8x FY02 earnings. The scrip generally trades in a band of 3x-6x. However, markets have pulled up valuations on divestment expectations. International refining and marketing (R&M) companies trade on a multiple of 8x-12x.
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: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407