1:2 Bonus, Rs 16.50/Sh Dividend: Maharatna PSU Is Piping Hot Stock, Motilal, CITI Says Buy, Rs 630 TP

Maharatna PSU oil and gas company, HPCL is an attractive bet currently after it announced a bonus issue of 1:2 and a dividend of Rs 16.50 per share. This comes despite the company recording a decline in Q4 net profit. Nonetheless, FY24 was a healthy year as HPCL turned losses into profits, while margins were above expectations. Accordingly, brokerages like Motilal Oswal and Citi have recommended BUY on the stock.

On BSE, HPCL's share price stood at Rs 501.45 apiece with a market cap of Rs 71,133.11 crore by the end of May 10, 2024. The stock is nearing its 52-week high of Rs 594.45 apiece.

HPCL Dividend:

The company has announced a final dividend of Rs 16.50 per equity share having a face value of Rs. 10/- each (pre-bonus), which translates into a final dividend of Rs. 11 per equity share having a face value of Rs. 10/- each (post-bonus) for the Financial Year 2023-24

The record date for the final dividend is fixed on August 9, 2024. HPCL said that the same will be paid within 30 days from the date of the declaration at the ensuing AGM.

Earlier, for FY24, the company paid interim dividends up to Rs 15 per share.

HPCL Bonus Issue:

This OMC declared bonus issue in the ratio of 1:2. Meaning, HPCL will distribute 1 bonus share free of cost for every existing 2 shares held by investors. The record date is fixed on July 21, 2024.

The paid-up share capital is at Rs 1,418.55 crore on pre-bonus but will rise to Rs 2,127.82 crore on post-bonus. The premium required for implementing the bonus issue will be from the company's free reserves which are currently at Rs 709.27 crore.

This will be the third bonus issue by HPCL in less than a decade. Earlier, HPCL rewarded investors 1:2 bonus shares in July 2017, and another 2:1 bonus issue in September 2016.

BUY HPCL Share Price?

Currently, CITI has maintained a BUY on HPCL stock for a target price of Rs 630 per share. The outlook is Neutral for the company.

Meanwhile, in its research note, Motilal Oswal said, "Refining throughput was above our estimate at 5.8mmt (+18% YoY). The reported GRM was below our estimate at USD6.9/bbl (-51% YoY). Marketing volumes stood at 12.3mmt (vs. our estimate of 11.4mmt, +11% YoY)."

Further, Motilal's note said, "For FY24, EBITDA was at INR253.6b (vs. a loss of INR57.1b in FY23), with PAT at INR146.9b (against a loss of INR89.7b in FY23)."

Accordingly, Motilal said, "We have a BUY rating on HPCL." The target price on HPCL will be announced soon.

On a consolidated basis, in Q4FY24, HPCL registered a net profit of Rs 2,709.31 crore, declining by 25% from its profit of Rs 3,608.32 crore in Q4FY23. On the top-line front, consolidated total income stood at Rs 1.22 lakh crore during the quarter under review, dropping by 6%, as against Rs 1.15 lakh crore in Q4FY23.

For FY24, the company's consolidated PAT is at Rs 16,015 crore during FY 2023-24 (Consolidated Net Loss of Rs 6,980 crore during the previous financial year). The Standalone PAT during FY 2023-24 was also the highest ever at Rs 14,694 crore (Standalone Net Loss of Rs 8,974 crore during the previous financial year).

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.