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HPCL follows suit

Aug 2, 2000

HPCL's performance has followed the trend set by the other two oil giants. The company has reported an increased in topline whereas the bottomline has declined.

(Rs m) 1QFY00 1QFY01 Change
Sales 64,837 111,033 71.2%
Other Income 315 396 25.6%
Expenditure 60,959 107,203 75.9%
Operating Profit (EBDIT) 3,878 3,830 -1.2%
Operating Profit Margin (%) 6.0% 3.4%
Interest 239 781 226.4%
Depreciation 519 998 92.3%
Profit before Tax 3,435 2,447 -28.8%
Tax 1,133 440 -61.1%
Profit after Tax/(Loss) 2,301 2,006 -12.8%
Net profit margin (%) 3.5% 1.8%
No. of Shares (eoy) 226 339
Diluted Earnings per share* 27.2 23.7
*(annualised)

The company has declared an impressive growth in topline of 71%. The growth has been primarily driven by purchases for resale, which is a purely marketing function.

Besides, the operating profit declining the OPM has registered a sharp drop. The margins have been hit mainly because of the rise in crude oil prices without the corresponding rise in product prices. This state of affairs is the result of the oil co-ordination committee (OCC) not revising the petroleum product prices. If one looks at the prevaling global scenario this quater has been extremely profitable for International oil majors, in fact, there are talks of levying windfall tax on the profits of these companies. A controlled regime has adversely impacted the performance of Indian oil majors.

Pre-tax profits have been impacted due to the sharp rise in interest and depreciation. The rise in interest is on account of increased working capital requirement meant to bridge the gap created by the blockage of funds with the OCC.

HPCL at Rs 113 is trading at a multiple of 4.8 on 1QFY01 annualised earnings. Whereas, BPCL is quoting a multiple of 3.6 on 1QFY01 annualised earnings.

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