X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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: The misery continues - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

HPCL: The misery continues
Nov 12, 2008

Performance summary
  • Topline increases by 46% YoY in 2QFY09.
  • EBITDA margins plunge into the negative this quarter, down from 6% in 2QFY08.
  • Other income declines 31% YoY during the quarter.
  • Bottomline plummets into the red on the back of operating losses and lower other income.
  • For 1HFY09, the topline grows by 51% while the bottomline turns red.


Standalone financial snapshot

(Rs m) 2QFY08 2QFY09 Change 1HFY08 1HFY09 Change
Net sales 243,751 355,221 45.7% 464,719 703,304 51.3%
Expenditure 229,175 380,658 66.1% 449,271 732,261 63.0%
Operating profit (EBDITA) 14,576 (25,438)   15,448 (28,958)  
EBDITA margin (%) 6.0% -7.2%   3.3% -4.1%  
Other income 1,408 978 -30.5% 2,601 2,067 -20.5%
Interest 1,399 5,269 276.8% 2,732 9,333 241.6%
Depreciation 2,017 2,420 20.0% 3,815 4,787 25.5%
Profit before tax 12,568 (32,149)   11,502 (41,010)  
Tax 4,037 40 -99.0% 3,841 60 -98.4%
Profit after tax/(loss) 8,530 (32,189)   7,661 (41,070)  
Net profit margin (%) 3.5% -9.1%   1.6% -5.8%  
No. of shares (m)         339  

What has driven performance in 2QFY09?
  • HPCL’s gross refining margins for 1HFY09 were US $ 5.82 per barrel (US $ 6.26 per barrel in 1HFY08) for its Mumbai refinery and US $ 4.11 per barrel (US $ 6.14 per barrel in 1HFY08) for its Visakh refinery.

  • HPCL’s financial results for 1HFY09 have been adversely affected due to high crude and product prices, which could not be fully passed on to the consumers. The under recovery for the half year was partially compensated by way of discounts from upstream oil companies, i.e. ONGC and GAIL in respect of crude oil / LPG / kerosene purchased from them amounting to Rs 54 bn (Rs 18 bn in 1HFY08) and oil bonds to the tune of Rs 93 bn (Rs 24 bn in 1HFY08).

    Cost break-up

    (Rs m) 1QFY08 1QFY09 Change
    Raw materials 214,820 361,390 68.2%
    % sales 88.1% 101.7%  
    Staff cost 2,074 3,442 66.0%
    % sales 0.9% 1.0%  
    Other expenditure 12,282 15,826 28.9%
    % sales 5.0% 4.5%  
    Total cost 229,175 380,658 66.1%
    % sales 94.0% 107.2%  

  • During 1HFY09, HPCL’s subsidy claim from the government towards sale of domestic LPG and PDS kerosene amounted to Rs 2.8 bn (Rs 2.7 bn in 1HFY08).

What to expect?
At the current prices of Rs 211, the stock trades at price to earnings ratio of 6.2 times our FY10E consolidated earnings. We advise caution at this juncture as the rupee dollar exchange rate and regulatory concerns will continue to impact the short-term performance of the company while poor return on incremental capital expenditure will impact the long-term performance of the company.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

HPCL SHARE PRICE


Feb 23, 2018 (Close)

TRACK HPCL

COMPARE HPCL WITH

MARKET STATS