- 01 Feb 2022
- ICICIdirect Research
Marketing inventory loss dents profitability of HPCL
HINDPETRO - 419 Change: 3.20 (0.77 %)News: HPCL revenue increased 18.1% QoQ to Rs.103422.4 crore as marketing sales improved 13.2% QoQ to 10 MMT. Reported GRM stood at US$ 6.4/bbl while crude throughput of 4.2 MMT was up 67.6% QoQ as throughput was impacted in Q2FY22 due to refinery shutdown. The company reported marketing inventory loss of Rs.1746 crore post excise duty on petrol and diesel was partially cut. Subsequently, EBITDA came in at Rs.1870.7 crore, down 37.9% QoQ leading to reported PAT at Rs.868.9 crore, down 54.8% QoQ.
Views: HPCL results were weaker than expectations as company reported marketing inventory loss owing to excise duty cut. Compared to other OMCs, HPCL’s GRMs were subdued and are expected to pick-up with full capacity utilisation going ahead. With gradual recovery in global product cracks, sustained GRMs will be key monitorable. Improvement in refining profitability along with passing on higher retail prices of petrol & diesel to customers will be important for HPCL's performance in the near term.
Impact: Neutral