An employee pushes a tricycle loaded with HPCL LPG cylinders. Photographer: Dhiraj Singh/Bloomberg

Q3 Results: HPCL’s Profit Slumps But Beats Estimates

Hindustan Petroleum Corporation Ltd.’s profit slipped for the fourth straight quarter in the October-December period offset by the volatility in the crude oil prices.

The company reported a net profit of Rs 247.6 crore for the three months through December. That compares with a net profit of Rs 1,092 crore in the previous quarter. Analysts’ estimates compiled by BloombergQuint pegged a loss of Rs 1 crore. Revenue rose 6.8 percent to Rs 72,111.8 crore on a sequential basis against the estimated Rs 66,707 crore. The company attributed the dip in profit to inventory losses over fluctuations in crude price volatility. Its inventory loss for the December-ended period stood at Rs 3,465 crore. That compares with an inventory gain of Rs 1,477 crore in the year-ago period.

Earnings before interest, taxes, depreciation and amortisation fell 54.6 percent quarter-on-quarter to Rs 963.2 crore in the October-December period. Operating margin contracted 180 basis points sequentially to 1.3 percent.

Gross refining margin—or the amount it earns for converting a barrel of crude oil to fuel—fell below the $4-a-barrel-mark for the first time in nine quarters to $3.72 a barrel from $4.81 in the previous quarter. Analysts estimated the GRM at negative $0.52 per barrel. HPCL’s Chairman MK Surana said today at a conference that the decline in GRM was due to higher inventory losses and higher fuel costs which were partially offset by improved product crack spread, the pricing difference between a barrel of crude oil and products refined from it.

Interim Dividend Announcement

The oil marketer declared an interim dividend of Rs 6.50 per equity share of face value Rs 10. It set Feb. 15 as the record date to ascertain eligibility of shareholders or beneficial owners to receive the dividend. The announcement is to help its major shareholder—Oil and Natural Gas Corporation Ltd.—raise funds to conduct a buyback.

Also read: BQEdge | Speed Bumps For M&M’s Stock And Why HPCL May Announce Dividend

The capital expenditure outlay of ONGC Ltd., IOC Ltd., GAIL (India) Ltd., Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corp Ltd., Mangalore Refineries and Petrochemicals Ltd. and their subsidiaries is at its lowest since 2014-15, according to Union budget.

The decline in spending comes when the government is emphasising on raising domestic output to cut costly oil imports.