Neutral HPCL; target of Rs 335: Motilal Oswal

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Marketing margins under pressure: Expected marketing losses due to high Brent prices, elevated diesel GRMs, and limited room for auto-fuel price hikes before the UP elections.
  • Refining gains partly offset by freight: Realized refining margins are likely to be lower than headline GRMs due to elevated shipping freight costs.
  • Earnings cut driven by marketing segment weakness: Full-year FY27E standalone estimates cut due to higher marketing losses and LPG under-recovery.
  • Risk from crude assumption: Any upward revision in crude prices could lead to further earnings cuts.

Thesis Validation Checklist

  • Marketing margins: Watch for any changes in marketing losses and auto-fuel price hikes.
  • Refining throughput and GRMs: Monitor refining performance and GRMs for any signs of improvement.
  • LPG under-recovery: Track LPG under-recovery and its impact on HPCL's earnings.
  • Crude prices: Keep an eye on crude prices and their potential impact on HPCL's earnings.