1:2 Bonus + Rs 22.50 Dividend In 14 Months: Maharatna PSU Stock HPCL Advised To Buy/Accumulate: New Target?

Two brokerages have recommended BUY on Maharatna PSU oil and gas giant, HPCL. On August 14, HPCL shares turned ex-dividend for payout of whopping Rs 10.50 per share. In less than 14 months, HPCL stock has delivered at least Rs 22.50 dividend per share, which comes after its 2:1 bonus issue. Analysts are optimistic after HPCL's Q1 result for FY26.

According to Emkay Global, HPCL reported a 6% miss in Q1FY26 earnings, with standalone EBITDA/PAT at Rs76.7/43.7bn. However, core PAT was 3% above our estimate, driven by better marketing and a lower opex run rate. Inventory losses were higher, although core GRM of USD6.6/bbl was decent amid a lower Russian crude share (13% in Q1) and discounts. Reported GRM came in at USD3.1/bbl. Blended marketing margin rose to Rs9.3/kg, driven by autofuels and lower LPG underrecoveries (Rs21.5bn). Vizag refinery operated at 15mmtpa capacity with 111% utilization.

Also, Emkay's note added, "HPCL's outlook is steady despite geopolitical upheavals as Russian crude share is not sizeable; completion of Vizag Resid project by early Q3 should support GRMs, and the government approving a total of Rs300bn of LPG sector subsidy would lower debt by ~Rs80bn. Crude prices despite periodic volatilities is on average below USD70/bbl. We keep our estimates largely unchanged, building in USD70/bbl of Brent; we retain BUY with a TP of Rs500."

Furthermore, Swarnendu Bhushan, Co-Head of Research, Institutional Research at PL Capital said, "We believe GRMs will rebound to the long-term average of USD5-7/bbl in FY26/27 and build in a GRM of USD6/7/bbl for FY26/27E. On the marketing front, we build in a GMM of Rs4.4/4.5/4.9/lit for FY25/26/27E. The company has reduced its debt from Rs633bn in FY25-end to Rs510bn in the quarter. The stock has corrected by ~10% in past few days. Due to possible strength in GMM in near term along with crude oil correction, we upgrade the stock to Accumulate with target price of Rs422 (earlier Rs360), valuing it at 1.3x FY27 PBV."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.