Brokerages have maintained a positive outlook on Hindustan Petroleum Corporation Limited (HPCL) despite a challenging Q2. Here’s a summary of the views from UBS, Citi, and Nomura on HPCL’s prospects, with target prices ranging from ₹420 to ₹445.
UBS on HPCL
Rating: Buy
Target Price: ₹445 (19.4% upside from CMP ₹372.80)
UBS maintains a Buy rating on HPCL, emphasizing the company’s all-round focus on investments aimed at supporting long-term growth and profitability. UBS notes HPCL’s integrated margins remain strong, although under-recoveries and inventory losses have posed challenges. The brokerage also highlights that HPCL’s physical performance is improving as key projects near completion, which should support growth.
Citi on HPCL
Rating: Buy
Target Price: ₹420 (12.6% upside from CMP ₹372.80)
Citi remains optimistic on HPCL, despite the company’s subdued Q2 EBITDA of ₹22 billion, which fell short of Citi’s ₹37 billion estimate. The brokerage attributes the miss to multiple factors, including significant inventory losses in refining and marketing (₹14 billion combined), weaker-than-expected gross refining margins (GRMs), and lower marketing margins. However, Citi believes these factors may reverse in the second half of FY25, with GRMs already showing signs of recovery and marketing margins trending higher. Citi expects one-off issues that impacted HPCL’s debt level in Q2 to normalize moving forward.
Nomura on HPCL
Rating: Buy
Target Price: ₹435 (16.7% upside from CMP ₹372.80)
Nomura also maintains a Buy rating on HPCL, though it has cut its FY25 EBITDA forecast by 25% to account for HPCL’s first-half performance and elevated LPG under-recoveries. Nomura highlights that Q2 performance was impacted by sustained under-recoveries in LPG and lower refining margins. The brokerage points to upcoming project completions, including the Vizag bottom upgradation and Rajasthan refinery by the end of FY25, as potential catalysts for future growth.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making investment decisions.
