Hindustan Petroleum Profit Jumps 30%, Vizag and Mumbai Refineries Expansion on Track
The net profit for the April-June period rose 30 percent to Rs 2098.4 crore from Rs 1614.1 crore in the corresponding period of the previous year.
Hindustan Petroleum Corporation Ltd., posted a 30 percent profit growth in the first quarter of financial year 2016-17, beating street estimates.
Net profit for the April-June period rose to Rs 2,098.4 crore from Rs 1,614.1 crore in the corresponding period of the previous year. The consensus of estimates tracked by Bloomberg stood at Rs 1,294.3 crore.
Revenue for the quarter-ended June declined 5.7 percent to Rs 51,599.5 crore from Rs 54,739.5 crore in the same quarter last year. The Bloomberg consensus estimate was Rs 48,472.8 crore.
Gross refining margin, the difference between the total value of petroleum products and price of crude, stood at $6.83 a barrel during the quarter against $8.56 a barrel.
Earnings before interest, taxes, depreciation and amortisation increased 17 percent to Rs 3626.8 from Rs 3099.2 crore year-on-year. The EBITDA margin expanded 130 basis points to 7 percent from 5.7 percent
The company’s crude throughput, or the rate of production, grew to 4.48 million metric tonnes (MMT) from 3.75 MMT. Domestic sales, by volume, increased to 8.89 MMT from 8.46 MMT. International sales, however, fell to 0.03 MMT from 0.12 MMT.
HPCL’s board has recommended issue of bonus shares in the ratio of two shares for every one share held, according to the company’s filing.
Inventory Boost
Chairman and managing director MK Surana attributed the jump in profit to inventory gains of Rs 1,100 crore for the quarter, in an interview with BloombergQuint. The company expects to maintain refining margins given that the crude price volatility, cracks and other factors do not have a very negative impact, he added.
Expansions on Track?
According to Surana, HPCL plans to spend Rs 4,000 crore to expand and upgrade their Mumbai refinery, increasing its capacity to around 9.5 million metric tonnes from 7.5 million metric tonnes currently.
The board has also approved a Rs 20,928 crore expansion project for its Vizag refinery, in an attempt to bridge the gap between refining and marketing volumes, the company said in the earnings press release. The project aims to increase the refinery’s capacity to 15 MMT per annum from 8.33 MMT per annum, hence, improving yield on total refining capacity and gross refining margins.
Both these refineries will also be made compliant to BS-VI fuel norms as part of this expansion plan.
Iranian Oil Boost
Hindustan Petroleum has been contracted to buy up to 2 million tonnes of Iranian oil in the financial year 2016-17, MK Surana said at the press conference. The company bought 1 million tonnes of Iranian crude in July and is planning to buy another 1.75 million tonnes in August.