A worker presses a valve that releases oil from a pipe into a bucket at an oil field (Photographer: Taylor Weidman/Bloomberg)

HPCL Q3 Profit Beats Analyst Estimates On Strong Inventory Gains

Hindustan Petroleum Corporation Ltd.’s profit rose in the quarter ended December, surpassing analyst estimates on strong inventory gains.

Net profit of the state-owned oil and gas company increased 12.39 percent to Rs 1,950 crore as compared to the previous quarter, according to a stock exchange filing. That’s higher than the Bloomberg consensus estimate of Rs 1,492 crore.

The bottom line increase was led by better refining margins, Chairman and Managing Director MK Surana said at the press conference to announce earnings. Inventory gains rose to the highest in six quarter to Rs 1,477 crore from Rs 787 crore in the previous quarter.

  • Revenue jumped 21 percent top Rs 57,474 crore, slightly higher than the consensus estimate of Rs 57,755 core.
  • Earnings from interest, tax, depreciation and amortisation rose 8.7 percent quarter-on-quarter to Rs 3,159 crore.
  • The operating margin contracted to 5.5 percent from 6.11 percent in the same period.

HPCL earned $9.04 for every barrel of crude processed into fuel in the third quarter as compared to $7.61 per barrel in the previous quarter. It was also higher than the $7.6 per barrel estimated. The Singapore gross refining margin – the Asian benchmark – averaged around $7.2 per barrel.

HPCL Q3 Profit Beats Analyst Estimates On Strong Inventory Gains

Segmental Break-Up

  • Refining ebitda up 28 percent to Rs 1,590 crore quarter-on-quarter.
  • Refining inventory gain rose 41 percent to Rs 637 crore.
  • Marketing ebitda fell 16 percent to Rs 1,772 crore.
  • Marketing inventory gain jumped more than 2 times to Rs 840 crore.

The board declared an interim dividend of Rs 14.5 per equity share of face value Rs 10 each for the financial year 2017-18.

India’s largest oil explorer, Oil and Natural Gas Corporation Ltd., last month acquired the government’s 51 percent stake in HPCL, helping the Centre exceed its record divestment target for the first time. For now, there will be no management change post the merger, Surana said, adding that a discussion on possible merger with MRPL will begin soon.

The stock declined 0.66 percent to Rs 397 apiece after the earnings announcement. It has declined 1.9 percent in October-December quarter, compared to 8.9 percent advance in the country's benchmark Sensex.