HPCL reports strong Q4 earnings performance; Inventory gain lend support
Shares of Hindustan Petroleum Corporation (HPCL) rallied 8% and hit a 52-week high of Rs 288.15 on the BSE in intra-day trade on Friday after reporting many-fold jump in its March quarter (Q4FY21) net profit to Rs 3,018 crore on the back of inventory gains and rise in refining margins. The state-owned oil marketing company had a net profit of Rs 27 crore in January-March 2020 (Q4FY20).
The company announced final dividend of Rs 22.75 per share, translating to dividend yield of 9% for FY21. It also completed its share buyback program on April 20, 2021.
HPCL’s marketing sales volumes were 9% above est. at 10.1mmt (+6% YoY). The marketing margin stood at Rs 6/lit.
The company earned $8.11 on turning every barrel of crude oil into fuel in the January-March period. This is compared with a negative gross refining margin (GRM) of $1.23 per barrel (BBL). Average GRM during the year ended March 31, 2021 was $3.86 per BBl as against US 1.02 per BBl during the corresponding previous year.
Inventory gains are booked when raw material (crude) prices rise by the time a company processes oil into fuel. Losses are booked when the reverse happens.
Marketing volume growth was sharply ahead of industry growth. Marketing profitability is likely to be restored as crude cools and retail price hikes continue.
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