Q4 Results: Hindustan Petroleum’s Profit Surges On Higher Inventory Gains

Hindustan Petroleum Corporation Ltd.’s quarterly profit surged 12 times on a sequential basis, aided by higher inventory gains.

Net profit rose to Rs 2,970 crore in the March-ended quarter from Rs 248 crore in the October-December period, the state-run oil marketer said in an exchange filing.

“Higher throughput, rising marketing volumes, better operational efficiencies and inventory gains have led to a surge in profit,” the company’s Chairman and Managing Director Mukesh Kumar Surana told BloombergQuint.

The oil marketer’s inventory gains for the quarter stood at Rs 916 crore compared with an inventory loss of Rs 3,465 crore in the preceding three months. That’s because the crude surged 30 percent in the three months ended March and averaged around $63 per barrel. 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.

HPCL’s operating profit jumped more than fivefold over the previous quarter to Rs 5,166 crore, while its operating margin expanded 630 basis points to 7.6 percent. Its gross refining margin—the amount earned by refining one barrel of crude oil—stood at $4.51 a barrel against $3.72 in the December-ended quarter.

The ongoing trade tension between the U.S. and China has disrupted the demand for crude, whereas the supply side continues to grapple with issues like uncertainty over production cuts by OPEC and allies, the crisis in oil-rich Venezuela and the geopolitical tension in the Middle East. Surana said these are the key factors to look out for in the coming months. He expects crude to touch the $70-75-a-barrel barrel mark in the ongoing financial year. “We need to watch how it plays out on both sides.”

Key Highlights (Quarter-On-Quarter)

• Revenue down 5.8 percent to Rs 67,938 crore.
• Foreign exchange gains of Rs 248 crore against Rs 597 crore.
• Crude throughput up 0.9 percent to 4.6 million metric tonnes.
• Sales volume up 4 percent to 10.11 MMT.
• Debt rose 30 percent to Rs 27,240 crore for the fiscal ended March 2019 from Rs 20,991 crore a year ago.
• Other income increased 33 percent to Rs 522.5 crore.

Besides, the company announced a dividend of Rs 9.4 per share.

Watch the full interview here: