HPCL - Big Upside If Bet On Refining Pays Off: ICICI Securities
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ICICI Securities Report
Hindustan Petroleum Corporation Ltd. is set to boost its refining (1.7-2.2 times), petrochemical (8.6-11.5 times) capacity and raise complexity of its refineries.
Full benefit of these projects is likely to accrue in FY25E.
However, in the interim, the company may be impacted by weak gross refining margins, sub-optimal gains from stabilising projects, below FY21 peak auto fuel marketing margin, and rise in debt.
The key to stock performance is how soon GRM recovers, which depends on pace of global demand recovery and refinery closures.
A strong GRM phase coinciding with stabilisation of its projects appears likely.
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