Shares of Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) fell 4 per cent to Rs 238 per share and Rs 323 per share, respectively, in intra-day trade on BSE on Monday as the companies posted heavy losses in the quarter. loss was recorded. Which ended in June (Q1FY23).
On the back of stagnation in petrol and diesel prices, fuel retailers suffered huge losses, eroding their marketing margins. While BPCL reported a loss of Rs 6,148 crore in Q1FY23, HPCL reported its highest ever quarterly net loss of Rs 10,196.14 crore.
For HPCL, total expenditure increased by 78.6 per cent to Rs 1,35,370 crore in Q1FY23 as compared to Q1FY22 due to higher input prices. The company reported a cost of material consumed of Rs 33,706.71 crore in Q1 FY23, which is significantly higher than the Rs 10,732.77 crore reported in Q1FY22. read more
BPCL’s revenue from operations. On the other hand, increased to Rs 1.38 trillion, yet the state-run firm posted negative EBITDA (earnings before, interest, tax, depreciation and amortization) of Rs 5,461.56 crore in Q1, up from positive Ebitda of Rs 5,308.52 crore last year was. read more
During April-June, none of the fuel retailers including Indian Oil Corporation (IOC), BPCL and HPCL revised their petrol and diesel prices in line with rising costs, to help the government keep inflation above 7 per cent. So to receive. India’s basket of crude imports averaged $109 a barrel during the quarter, but retail pump rates were aligned with costs of around $85-86 a barrel.
With the underperformance of the marketing segment coupled with higher expenses, the brokerage house has lowered the earnings-per-share (EPS) estimates for these oil marketing companies.
Analysts at HDFC Securities said, “We have cut our EPS estimates for HPCL by 9/1 per cent to Rs 36.1-47.7 for FY 23-24, taking into account lower marketing gross margin and higher interest cost. Is.”
Similarly, global brokerage firm Jefferies expects weak marketing margins to impact BPCL’s operating performance. He wrote, “Continuous losses in diesel have prompted us to reduce our valuation multiplier for BPCL by ~7x to 6x fwd-EBITDA. We have revised our FY23E earnings for sustained losses before normalizing in FY24/25E. cut,” he wrote.
Analysts at Jefferies said the hike in retail fuel prices and reimbursement of losses incurred by the government could act as a positive trigger for the name of fuel retailers, as they have ‘buyed’ on BPCL with a target price of Rs 410 per share. ‘ The stand has been maintained. share.
Sharing a similar tone, brokerage firm Edelweiss Securities remains bullish on positive structural growth prospects of BPCL and HPCL, expecting gross refining margin to rise above $10 after calendar year 2024 (CY24). He has maintained a ‘buy’ stance on both BPCL and HPCL, with 12-month target price of Rs 440 per share and Rs 328 per share respectively.
So far this calendar year, BPCL and HPCL have declined by 13 per cent and 14 per cent, respectively. However, frontline indices Nifty 50 and S&P BSE Sensex remained flat during the same period.
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