Dealer’s name: HPCL/BPCL (Purchase) – The Hindu BusinessLine

Goal: ₹580/₹687

CMP: ₹494/605.70

HPCL: Sharply turning round its fortunes, Hindustan Petroleum’s FY24 EBIDTA/PAT was ₹24,800 crore/₹14,600 crore (from FY23’s ₹7,500 crore/₹8,900 croreloss). This fall revenue was ₹2,840 crore, barely beneath our estimate because of decrease GRMs. Forward, we anticipate crude oil costs to be range-bound at $80-90/bbl, which might profit OMCs with regular refining and advertising and marketing earnings.

The Company would profit from the beginning of its Vishakhapatnam refinery enlargement in Q3 FY25, as refining margins are more likely to be excessive (an added $2-3/bbl). We reiterate a Purchase, with a decrease TP of ₹580 (₹643 earlier), 5.5x FY24e EV/EBITDA.

BPCL: A file 12 months, BPC’s FY24 EBITDA/PAT had been ₹44,100 crore/₹28,470 crore (₹10,900 crore/₹3,500 crore the earlier 12 months), which resulted in debt dropping sharply to ₹18,700 crore (₹37,000 crore in FY23). This fall earnings had been a slight miss because of decrease refining margins. For FY25, we have now modelled conservative refining/advertising and marketing margins.

The Company is our most well-liked choose of friends, given its sturdy BS and potential monetisation of abroad E&P property such because the Mozambique LNG asset in CY24.

We largely retain our estimates and Purchase score, and 12-month TP of ₹687.