The company attributed the rise in profit to higher capacity utilisation of its refineries and higher sales of high margin products as it processed more crude oil purchased at lower rates.
The buyback will be done through market transactions and will be completed within six months.
State-run Hindustan Petroleum Corporation (HPCL) reported a net profit of Rs 2,477.5 crore on a standalone basis for the three months ended September 30, recording a 135.4% rise from the same period a year ago.
The oil refining and marketing company also announced the buyback of 10 crore equity shares — representing 6.56% equity stake—at Rs 250 per share, which is 34% higher than the rate HPCL’s stocks were trading at Wednesday’s close. The buyback will be done through market transactions and will be completed within six months.
The company attributed the rise in profit to higher capacity utilisation of its refineries and higher sales of high margin products as it processed more crude oil purchased at lower rates. While revenue fell 6.6% year-on-year (y-o-y) in Q2FY21 to Rs 62,419.3 crore, expenses—comprising mostly of crude oil purchase—dropped by a sharper 9.4% to Rs 59,127.3 crore. The company’s gross refining margins, including inventory gains, increased to $5.11/barrel in the quarter, up from $2.83/barrel in Q2FY20.
“The significant improvement in the profitability despite challenges including Covid-19 induced lockdown was a result of strategic planning in refinery and marketing operation, containing the de-growth to less than the industry, efficient inventory management and effective product placement leveraging company’s excellent marketing infrastructure,” said HPCL chairman Mukesh Kumar Surana.
The refineries at Mumbai and Visakh processed 4.06 million tonnes (MT) of low-priced crude during the quarter, 0.5 MT less than the corresponding period last year, as domestic sales volume fell 9.5% to 8.1 MT amid sporadic lockdowns across the country to contain the outspread of the coronavirus. HPCL refineries registered a capacity utilisation of 103% during the period. After adding 464 new retail outlets in the fiscal, HPCL’s total network size amounts to 17,171. HPCL said that project works have resumed and upgradation of Visakh and Mumbai refineries are in progress and will be completed in the calendar year 2021.