HPCL Shares Surge 5% After Strong Q3, 40% Upside Predicted

Shares of the state-owned oil marketing company, Hindustan Petroleum Corporation Limited (HPCL), are drawing attention in Friday's trading session following its impressive financial performance for the October-December quarter. The company reported a standalone net profit (PAT) of ₹3,023 crore for Q3FY25, marking a staggering 471% year-on-year surge. This figure significantly surpassed analysts' estimates, which had projected a profit of ₹2,510 crore. In the preceding quarter (Q2FY25), HPCL's PAT stood at ₹631 crore.

The HPCL share price rallied as much as 4.9% to ₹379.95 apiece on the NSE on Friday, January 24.

The remarkable improvement in profitability—rising 379% from Q2FY25 and 471% compared to Q3FY24—is credited to strong operational efficiencies and physical performance in both its Refining and Marketing segments, along with enhanced margins, according to the company's regulatory filing.

Revenue from operations during the quarter was ₹1,18,936 crore, slightly higher than the ₹1,18,443 crore recorded in the same period last year. In contrast, the company's revenue in the September quarter stood at ₹99,413 crore.

The company also reported an average Gross Refining Margin (GRM) of $6.01 per barrel for Q3FY25, compared to $8.49 per barrel in Q3FY24.

HPCL Performance

Additionally, HPCL disclosed that in the nine-month period ending December, it achieved its highest-ever crude throughput of 18.53 MMT, reflecting a 12.4% increase compared to the 16.49 MMT processed during April-December 2023.

Global Brokerage Views on HPCL Post Q3 Results

Morgan Stanley remains bullish on HPCL and has set a price target of ₹506, indicating a potential upside of approximately 40%. The brokerage highlighted that the company's Q3 profit significantly exceeded its estimates, with a core PAT of ₹4,700 crore. It also noted that HPCL's marketing volume growth of 8% year-on-year outpaced industry trends, and its integrated margin of $9.3 per barrel (including an LPG loss of $3.7 per barrel) was better than expected.

Meanwhile, Citi has reaffirmed its 'buy' recommendation on HPCL, maintaining a target price of ₹450. The brokerage observed that the company's Q3 EBITDA showed a sharp sequential rise from ₹2,200 crore to ₹5,400 crore. Although this was 15% below estimates, it was still stronger than anticipated, particularly in light of BPCL's recent earnings miss. Citi also noted that investors would be closely watching the upcoming Budget for potential compensation to oil marketing companies (OMCs) for LPG-related losses.

Conversely, Jefferies has upheld its 'underperform' rating on HPCL, setting a target price of ₹295, implying a potential downside of nearly 19% from the last closing price.