Q2 Results: HPCL’s Profit Misses Estimates As Refining Margin Falls To Two-Year Low

Hindustan Petroleum Corporation Ltd.’s profit for the July-September period fell for the third straight quarter, missing estimates, as gross refining margin dipped to its lowest in nearly two years.

Net profit of the state-run oil marketer fell 36.5 percent sequentially to Rs 1,092 crore in the July-September period, according to its exchange filing. Analysts estimates compiled by BloombergQuint had pegged the profit at Rs 1,492 crore. Revenue rose barely a percent over the preceding quarter to Rs 67,518 crore in the three months ended September.

The company’s gross refining margin, the amount it earns for converting a barrel of crude oil to fuel, fell below the $5-a-barrel-mark for the first time in eight quarters to $4.81 a barrel from $7.9 in the previous quarter.

The company’s earnings before interest, taxes, depreciation and amortisation fell 33.5 percent quarter-on-quarter to Rs 2,122 crore in the July-September period. Operating margin contracted 160 basis points sequentially to 3.1 percent for the second quarter.

HPCL’s inventory gain dropped 33 percent sequentially to Rs 1,276 crore due to higher crude oil prices and a weaker rupee. Inventory gain or loss is the difference between the price at which a company buys crude oil and the price at which fuel is sold.

The company also reported a foreign exchange loss of Rs 887 crore for the July-September period compared to Rs 537 crore in the precious quarter.

Shares of the company rose as much as 4.73 percent to Rs 234.75 apiece ahead of its earnings announcement. The stock has fallen nearly 44 percent so far this year.

Corrects an earlier version of the copy that misquoted MK Surana, chairman and managing director of HPCL.