HPCL shares slip over 5% post Q1 results; should you buy?

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New Delhi | Updated: August 23, 2016 5:04:00 PM

HPCL shares slipped over 5 per cent on Tuesday despite the oil marketing company reported 30 per cent rise in net profit at Rs 2,098.38 crore for the quarter ended June 30, 2016 against Rs 1,614.13 crore in the corresponding quarter a year ago.

HPCL share price bse sensex nse niftyHPCL shares slipped over 5 per cent on Tuesday despite the oil marketing company reported 30 per cent rise in net profit at Rs 2,098.38 crore for the quarter ended June 30, 2016 against Rs 1,614.13 crore in the corresponding quarter a year ago. (PTI)

HPCL shares slipped over 5 per cent on Tuesday despite the oil marketing company reported 30 per cent rise in net profit at Rs 2,098.38 crore for the quarter ended June 30, 2016 against Rs 1,614.13 crore in the corresponding quarter a year ago. Net sales of the Hindustan Petroleum Corporation slipped by 12.86 per cent year-on-year to Rs 44779.25 crore for the quarter under review against Rs 51386.05 crore in the same quarter last year. However, operating profit of the company jumped by 16.96 per cent year-on-year to Rs 3902.10 crore from Rs 3336.27 crore in the same period. The share price of the oil marketing company closed 5.32 per cent down at Rs 1149.95. However, BSE Sensex settled marginally higher by 4.67 points at 27,990.21.

Motilal Oswal has ‘Buy’ rating on HPCL shares with target price of Rs 1,490. The brokerage house in a research note said, “Refining margins would continue to be cyclical, marketing profitability will be stable led by retail pricing power. We believe HPCL is now a structural investment play – led by higher earnings predictability and increase in profitability leading to higher return on equities.”

Japanese brokerage firm Nomura is also positive on HPCL shares with a target price of Rs 1,635. Nomura in a research note said, “HPCL is our preferred oil marketing company. Q1FY17 was another strong quarter for HPCL on account of large inventory gains. The reported operating and staff expenses were also lower than our expectations. The reported 1Q EPS of Rs 62 per share is nearly 46 per cent of our standalone EPS estimate of Rs 136 per share, and nearly 53 per cent of consensus standalone EPS of Rs 116 per share. We think after another strong result, the Street’s earnings upgrades for HPCL will likely to continue.”

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