Citi has maintained its ‘Buy’ rating on Hindustan Petroleum Corporation Ltd (HPCL) with a target price of ₹460, indicating a 42% upside potential from the current market price of ₹323.85. The brokerage highlighted the government’s appointment of a private-sector executive, Vikas Kaushal, as CMD for a five-year term as a significant and rare move in India’s oil sector.
Kaushal’s professional background includes serving on the Global Board of Directors at consultancy firm Kearney and working as the Managing Director & Country Head of Kearney India. He has also provided long-term advisory and consultancy services to companies, including Oil Marketing Companies (OMCs) and GAIL. While top leadership changes in state-owned oil enterprises (SOEs) typically do not influence investor sentiment, Citi believes this appointment is noteworthy.
Another key focus for HPCL is its plan to carve out its lubricants business to explore potential value-unlocking options. However, Citi noted that no firm progress has been made on this front. The brokerage also pointed out that HPCL’s 9M FY24 EBITDA could have been 80% higher if not for the impact of LPG under-recoveries. A more aggressive push for timely compensation by the top leadership of OMCs could provide investors with greater confidence in the company’s financial stability.
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