Nomura has maintained its ‘Neutral’ rating on Hindustan Petroleum Corporation (HPCL) and cut its target price to Rs 380 from Rs 420, citing higher-than-expected marketing losses and LPG under-recoveries.
In its October 23 report, the brokerage said HPCL’s second-quarter performance was better than expected, largely due to stronger fuel retailing performance and lower LPG under-recoveries. However, with Brent crude tracking above $110 per barrel, oil marketing companies (OMCs) are facing significant losses that could weigh on earnings in the third quarter.
Strong refining margins and lower marketing losses drive Q2 beat
HPCL reported standalone EBITDA of Rs 91 billion for Q2FY27, against Nomura’s estimate of Rs 38 billion. Bloomberg consensus had projected a loss of Rs 1 billion.
The company’s gross refining margin (GRM) came in at around $32 per barrel, broadly in line with Nomura’s estimate, as crack spreads remained elevated amid global refining outages and product shortages.