Dalal Street gives thumbs down to HPCL post Q1; stock drops 2%

Shares of Hindustan Petroleum Corporation (HPCL) dropped nearly 2 percent in early trade on August 3, post Q1 results amid a slew of brokerage downgrades. At 11:14 am, the HPCL stock was trading 1.74 percent lower at Rs 274 on NSE.

The state-owned oil retailer has reported standalone profit at Rs 6,203.9 crore for the quarter ended June FY24, rising 92.5 percent over previous quarter driven by strong operating numbers. Revenue from operations stood at Rs 1,11,960.6 crore in Q1FY24, rising 3.7 percent over Rs 1,07,928 crore in previous quarter.

Brokerage Views

Nomura has downgraded HPCL to ‘neutral’ rating and have given a target price of Rs 270 per share. The brokerage firm further stated in the report that, robust realized market has been partly offset by lower refining margin. Further, refining outlook remains robust with marketing thesis fading. The FY24 standalone EBITDA has been raised by 48 percent and FY25 EBITDA estimates are broadly maintained.

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Global brokerage firm Jefferies has also assigned an ‘underperform’ rating to the HPCL stock with a target price of Rs 225 per share. The firm further stated that, EBITDA has been reported 11 percent ahead of estimates. Still, with valuations above historical averages the brokerage house has maintained the ‘underperform’ rating.

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Brokerage firm Prabhudas Lilladher has given a ‘hold’ rating from the earlier assigned ‘buy’ with a target price of Rs 264 stating that, “We change our rating from ‘buy’ to ‘hold’ with a price target of Rs 264 (previous Rs 340) based on 0.8x P/B FY25E. The change in target price is attributed to change from previous analyst’s estimates as well as valuation method from EV/EBITDA to P/B.”’

Brokerage firm JM Financial whereas is bullish on HPCL and has assigned a ‘buy’ rating to the stock with a price target of Rs 300.

Stock Performance

HPCL stock has given a return of 21.46 percent over the last six months. The stock has outperformed the benchmark Nifty50 index which has given a return 9.37 percent over the same duration.

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