Oil Sector PSU Stock To Buy, Likely To Give Up To 22% Return, Says ICICI Securities

ICICI Securities in its report published on 15 May 2023 reiterates a buy on Hindustan Petroleum Corporation Ltd. (HPCL) with a target price of Rs. 315/share. If you buy the stock at the current market price, it can give up to 22% return, considering the given target price. HPCL is a midcap Maharatna status stock having a market price of Rs. 36,825.52 crore.

Strong end to FY23 augurs well for FY24E/FY25E

According to ICICI Securities, "HPCL's recurring standalone EBITDA / PAT for Q4 came in at Rs48.0bn / Rs32.2bn, up 2.8x / 18.7x QoQ respectively (YoY up 129% / 80%) vs our estimates of EBITDA of Rs35.4bn and PAT of 15.5bn. Higher refining margins and lower 'other opex' drove the operational beat, with higher 'other income' boosting net earnings. Recurring EBITDA loss for FY23 was at Rs131.4bn vs operating profit of Rs101.8bn in FY22. Recurring PAT loss for FY23 was at Rs145.9 vs positive PAT of Rs63.8bn for FY22. With record marketing margins for both petrol and diesel, near-term marketing earnings are set to be materially stronger. Overall, FY24E and FY25E are likely to see a stronger recovery with sharp increase in refining throughput, thanks to commissioning of ~7mtpa Vizag refinery and ~9mtpa Rajasthan refinery (50% share). "With valuations at abysmal levels and the worst in earnings seemingly over, we see prospects for HPCL brightening up over the next 12-18 months. Reiterate BUY," the brokerage has said.

Stock Outlook - Current Market Price, 52 Week Low/High, Returns

The stock of HPCL last traded at Rs. 259.60/share, down 0.44% from its previous close of Rs, 260.75/share. The stock hit the new 52 week high on 15 May 2023 at Rs. 269/share, while it hit the 52 week low on 20 October 2022 at Rs. 200.05/share.

The stock has given 2.22% positive return in 1 week, whereas, in 1 month, it has given 15.38% positive return In the past 1 year, it has given 0.56% positive return and 37.28% in 3 years, respectively. However, in the past 5 years, it has fallen 19.74%.

Disclaimer - The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.