(Reuters) – Indian refiner Hindustan Petroleum Corp Ltd (HPCL) reported a smaller-than-expected rise in quarterly profit on Thursday, hurt by lower marketing margins and losses in its liquefied petroleum gas (LPG) segment.
The state-owned firm’s standalone net profit rose nearly six fold to 30.23 billion rupees ($350 million) in the third quarter ended Dec. 31, falling short of Street expectations of 31.34 billion rupees, according to data compiled by LSEG.
HPCL’s average gross refining margin, a key profitability indicator for refiners, fell to $6.01 per barrel for the reported quarter from $8.49 per barrel a year earlier.
Sales inched up 0.4% to 1.18 trillion rupees, after the company took a hit of 75.99 billion rupees to account for the difference between LPG cylinders’ market-determined price and their subsidised selling price.
KEY CONTEXT
Fuel consumption rose in the December quarter in India, the world’s No. 3 oil importer and consumer, due to holiday-related travel and demand from the agriculture sector following strong monsoon rains.
Consumption rose 2.9% in October and surged 9.3% in November. It rose another 2.1% in December.
However, since March, HPCL and its peers Indian Oil Corp and Bharat Petroleum Corp Ltd (BPCL) have been facing losses on LPG as domestic prices remained fixed and raw material costs surged.
HPCL’s results mirror peer Bharat Petroleum’s, which posted a quarterly profit below expectations on Wednesday.
Global crude oil prices rose 4% in the quarter ended Dec.31
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean # of Stock to Div
growth growth rating analyst price yield
(%) (%) * s target ** (%)
HPCL 8.04 7.26 -4.36 10.27 Hold 15 0.92 5.83
BPCL 8.93 6.57 1.39 -11.12 Hold 22 0.81 7.57
IOC 8.27 6.71 2.00 3.92 Hold 21 0.80 9.20
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER-DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 86.4080 Indian rupees
(Reporting by Yagnoseni Das in Bengaluru; Editing by Savio D’Souza and Janane Venkatraman)
