A Bharat Petroleum tanker delivers fuel to a petrol pump in central Mumbai, India. (Photographer: Santosh Verma/ Bloomberg News)

Here’s What Analysts Made Of HPCL And BPCL’s Quarterly Performance

Oil-marketers Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. reported quarterly earnings that topped estimates on the back of higher inventory gains.

HPCL’s inventory gains jumped 12 times to Rs 1,905 crore, while it rose sixfold for BPCL to Rs 2,679 crore.

However, some of this positives were offset by higher foreign exchange losses due to adverse rupee movement during the quarter. Both the oil marketing companies saw expansion in their average gross refining margins during the quarter.

Here’s what brokerages had to say on the two companies and the sector:

Goldman Sachs On OMCs

  • Large inventory gains offset core weakness in Q1FY19.
  • Core GRM was below expectations while marketing margins were in line.
  • Marketing margin trends have started to improve as well.
  • Singapore GRMs have recovered from weakness seen in June.

Brokerages’ View On BPCL:

Deutsche Bank

  • Maintains ‘Buy’, with a target price of Rs 510.
  • Q1 earnings before interest, tax, depreciation and amortisation above estimates.
  • Good marketing segment performance and inventory gains deliver beat.
  • Strong performance contrary to investor concerns on adverse impact of high oil prices.

SBI Capital

  • Maintains ‘Buy’, with a target price of Rs 526.
  • Net profit above estimates purely driven by higher-than-expected inventory gains.
  • Refining core performance was weak with lower core GRM and higher operational expenditure.
  • Marketing inventory gain was higher than expected.
  • Temporary pause in price hike doesn’t change structural deregulation story.


  • Maintains ‘Buy’, with a target price of Rs 555.
  • Large inventory gains was a key reason for the performance.
  • Strong marketing margins adjusted for inventory gains.
  • Near-term focus likely to remain on retail prices of diesel/petrol.
  • Continues to believe OMCs should be able to pass on cost increases.

Bank of America Merill Lynch

  • Maintains ‘Neutral’, with a target price of Rs 443.
  • Q1 numbers higher on inventories.
  • Adjusted marketing Ebitda was in line and down significantly sequentially.
  • Higher bar for BPCL to meet FY19 estimates.
  • Fire at Mumbai refinery may hurt earnings in the near term.

Brokerages’ View On HPCL:


  • Maintains ‘Underweight’; cut target price to Rs 260 from Rs 295.
  • Large inventory gains drove earnings beat.
  • Underlying refining sharply weaker.
  • HPCL’s older refineries not ideally positioned for IMO.
  • Remains underweight given confluence of headwinds.

IDFC Securities

  • Maintains ‘Outperformer’; cut target price to Rs 416 from Rs 440.
  • Inventory gains offset weak refining; Strong marketing segment growth.
  • Sharp dip in retail margins due to strong crude prices.
  • Encouraged by operational performance for the quarter.

Deutsche Bank

  • Maintains ‘Buy’; cut target price to Rs 410 from Rs 422.
  • Q1FY19 results: net profit above estimate.
  • Strong marketing performance in a challenging environment.
  • Inventory gain supported robust refining margin.
  • Strong performance contrary to investor concerns on adverse impact of high oil prices.


  • Maintains ‘Neutral’, with a target price of Rs 357.
  • Q1 ahead of estimates on inventory.
  • Refining misses, while marketing beats estimates.
  • Higher margins needed to meet FY19.
  • Retail fuel margins are positive, but below average now.

Shares of HPCL rose as much as 3.7 percent in early trade to Rs 293.10, while those of BPCL rose as much as 2.8 percent to Rs 398.

Also read: Q1 Results: HPCL’s Profit Beats Estimates On Higher Inventory Gains