HPCL Q1 Results: Profit Falls On Lower Sales, Missing Estimates
Hindustan Petroleum Corp.’s quarterly profit fell, missing estimates, as sales fell amid lower demand during the second wave of the pandemic.
Net profit of the oil marketer fell 40.5% sequentially to Rs 1,795 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 2,061.7-crore consensus estimate of analysts tracked by Bloomberg.
Revenue fell 3.2% over the preceding quarter to Rs 72,443.4 crore, against the Rs 73,830.3-crore forecast.
Operating profit declined 31.6% to Rs 3,192.9 crore.
Other income fell 31.7% to Rs 372 crore.
Operating margin contracted to 4.4% from 6.2%.
Total expenditure, excluding excise duty, fell 1.3% to Rs 70,418 crore.
Gross refining margin—what a company earns by converting one barrel of crude into fuel—stood at $3.31 a barrel.
The company’s sales volumes fell 14% sequentially to 8.5 million metric tonnes as local lockdowns imposed to curb the second wave of the Covid-19 pandemic hurt consumption of petroleum products. A planned shutdown at its Mumbai refinery owing to capacity expansion led to throughput falling 42.8% over the preceding quarter.
India’s consumption of petroleum products fell 10.4% over January-March, with aviation turbine fuel witnessing the biggest drop of more than 30%, data released by the Petroleum Planning & Analysis Cell showed. Petrol and diesel demand contracted 13.2% and 10.5%, respectively, in the first quarter of the ongoing fiscal.
Refining margin was supported by an increase in benchmark GRM, higher crude oil prices that led to inventory gains and improved product spreads. The benchmark Singapore GRM rose 16.7% sequentially to $2.1 a barrel in the first quarter. Also, Brent crude prices averaged at $69.1 a barrel in the reported period, up 13% over the preceding three months. Petrol, diesel, and jet fuel spreads jumped 44%, 13%, and 36%, respectively, over the previous quarter.
Average marketing margin, however, remained under pressure during the period as retail price hikes lagged the increase in crude oil. Prices of petrol and diesel rose 9% and 10.2% between April 1 and June 30, compared with a Brent crude's 18.2% price rise.
Shares of HPCL fell over 1% before the results were announced compared with a 1.02% rise in the benchmark BSE Sensex.