HPCL Q3 Results Review – Earnings Improve On Better Marketing Margins: Yes Securities


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Hindustan Petroleum Corporation Ltd.’s Q3 FY23 reported Ebitda stood at Rs 16.7 billion (down 11% YoY; down 212% QoQ), better than our and street estimates as marketing margins possibly stood better than our estimates.

HPCL doesn’t declare marketing margins. The gross refining margin at $9.14/barrel of oil however stood marginally below our assessment. The sequential improvement in earnings stemmed from QoQ recovery in petrol and diesel retail margins to ~ Rs 10/litre (Q2: Rs (0.04)/ltr) and Rs (5.5)/ltr (Q2: Rs (12)/ltr), as global product price moderated, however firm high speed diesel cracks helped sustain gross refining margins.

As we write while petrol margins have moderated to Rs 6.5/ltr, the loss on retailing of diesel has also narrowed to Rs (3-4)/ltr. We expect retail marketing to normalise over FY24-25E.

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