HPCL: A Maharatna Company | Key Notes

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The year was historical for HPCL, as Government of India has conferred the coveted ‘Maharatna’ status to your Company, which entails greater operational and financial autonomy to the Corporation. Government of India has conferred ‘Maharatna’ status on October 24, 2019, featuring us in an elite list of 10 Central Public Sector Enterprises in India  

  • The Corporation is the second largest LPG marketer in the country. 
  • The Corporation is the number one lube marketer in India for a seventh consecutive year
  • During 2019-20, both HPCL refineries at Mumbai and Visakh maintained robust physical performance with combined capacity utilization of 108.7% and thruput of 17.18 MMT.  
  • In LPG and Petrol sales, the Corporation has crossed 7 MMT mark with a growth of 7.3% and 4.7% respectively.  
  • Company has significantly invested in expansion and upgradation of refineries and supply chain infrastructure with highest ever capital expenditure of over `  16,000 crore during 2019-20 
  • The last-mile delivery capability of The corporation was further enhanced with the commissioning of 1,194 new retail outlets and 245 new LPG distributorships during the year
  • The number of total retail outlets to 16,476 and number of total LPG distributors to 6,110 as of 31st March 2020.   
  • The Corporation has about 10,000 employees
Subsidiary/ JV of HPCL (Source Annual Report)

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Financial Performance of the company

Source: Annual Report

Sales / Income from Operations

Corporation has achieved Sales/ Income from Operations of ` 2,86,250.27 Crore in the financial year 2019-20 as compared to 2,95,712.56 Crore in the financial year 2018-19 on a standalone basis

Source: Annual Report of HPCL

Profit

Corporation has reported Earnings before Interest, Tax, Depreciation & Amortization (EBITDA) of ` 6,961.63 Crore without considering an exceptional the expense of 1,002.93 Crore in the financial year 2019-20 as against ` 13,077.21 Crore in the financial year 2018-19 and Profit after Tax of ` 2,637.26 Crore in the financial year 2019-20 as compared to ` 6,028.66 Crore in the financial year 2018-19 on a standalone basis  

Dividend

The Board of Directors, after taking into account the Financial Results of the Corporation during the financial year, have recommended final dividend of 9.75 per share for the financial year 2019-20 as compared to ` 15.90 per share for the financial year 2018-19 that comprise of `  9.40 per share as final dividend and ` 6.50 per share as interim dividend 

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Refinery Performance

During 2019-20, both HPCL refineries at Mumbai and Visakh maintained robust physical performance with combined capacity utilization of 108.7% and thruput of 17.18 MMT.

Corporation is setting up a new 9 MMTPA capacity greenfield Refinery cum Petro-Chemical The complex at Pachpadra in Barmer District of Rajasthan through a joint venture Company, HPCL Rajasthan Refinery Limited.   

 In Domestic Sales Segment, your Corporation recorded a volume of 37.74 Million Tonnes during the financial year (2018-19: 37.97 Million Tonnes), holding to its previous year’s market share of about 21% amongst the Public Sector Oil Marketing Companies (OMCs) 

The LPG business vertical set a new record during the financial year 2019-20, clocking a sales volume of 7 Million Tonnes. The year witnessed commissioning of 245 new distributorships (taking the total number of dealership to 6,110 at the end of the financial year), commissioning of 50th LPG bottling plant at Sugauli, Bihar

The success saga of Lubricant business continued during financial year 2019-20, retaining the pole position for the 7th consecutive year with a sales volume of 650 TMT, amidst highly competitive business environment having participation from MNC segment, 

In Aviation business line, your Corporation achieved a sales volume of 732 TMT. Aviation Service Facilities (ASFs) was augmented by setting up new facilities at Nagpur, Ranchi and Vidyanagar in the state of Karnataka taking the total ASFs to 44 

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Corporation continues to command highest domestic rating for long term (“AAA” with “Stable” outlook) and short term (“A1+”) facilities from CRISIL, India Rating and Research Limited and ICRA

Gross Refining Margins (GRMs) 

The Gross Refining Margin for HPCL averaged at US$ 1.02 per barrel for the year 2019-20 as against US$ 5.01 per barrel for the year 2018-19. Gross Refining Margin of Mumbai Refinery averaged at US$ 3.63 per barrel for the year 2019-20 as against US$ 5.79 per barrel for the year 2018-19. Gross Refining Margin of Visakh Refinery averaged at US$ (1.30) per barrel for the year 2019-20 as against US$ 4.31 per barrel for the year 2018-19.

Retail Petro Brands :

Focussed approach was undertaken in maximising the sales of branded fuels towards enhanced customer loyalty and offerings. The sales of branded Petrol ‘poWer’ and branded Diesel ‘TurboJet’ recorded significant growth of 19.4% and 49% respectively in 2019-20 recording highest growth among PSUs in the category. The availability of super premium branded Petrol, ‘poWer 99’ for high-end cars & two-wheelers was scaled up by making it available at 28 outlets across 12 cities which helped in achieve   

Impact of Covid -19

Corporation witnessed general fall in demand for petroleum products in the aftermath of Covid-19 pandemic. Significant drop in crude oil prices was witnessed in March/ April 2020 which recovered to some extent subsequently. During this period, your Corporation continued its operations, without disruption, to ensure supply of essential petroleum products. The impact of Covid-19 pandemic on the physical and financial performance of the Corporation for the financial year 2019-20 was lesser as the lockdown was announced only in the last week of March 2020. However, sharp fall in crude oil prices in March/ April 2020 did have inventory loss impact

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Sign of Recovery :  Sales of petroleum products in May 2020 was about 77% compared to May 2019 and sales in June 2020 was about 91% as compared to June 2019. MS and HSD sales were down by 62% and 55% respectively in April 2020 compared to April 2019, which improved to reach to about 85% level in June 2020 compared to June 2019. Sharp increase in demand for LPG was witnessed during the lockdown period. The Corporation increased the production of LPG by optimizing its operations and supplied an average 12.5 lakh cylinders per day to the customers during April-June 2020.

Shareholding Pattern

Shareholding of Promoters: Bodies -ONGC- 51.11%Shareholding Pattern of top ten Shareholders: (Other than Directors, Promoters and Holders of GDRs and ADRs) 

  1. HDFC Trustee Company Ltd. A/C HDFC Balanced Advantage Fund – 3.76%
  2. Life Insurance Corporation Of India : 3.09%
  3. Nippon India Tax Saver (Elss) Fund   :2.49%
  4. Mirae Asset Large Cap Fund :2.07%
  5. Franklin India Equity Fund : 1.39%
  6. Jupiter India Fund : 1.0%
  7. ICICI Prudential Life Insurance Company Limited :0.99
  8. SBI Blue Chip Fund : 0.97%
  9. Government Of Singapore : 0.96%
  10. Motilal Oswal Multicap 35 Fund : 0.94 

Conclusion

HPCL is a good bet in the PSU space if you are looking to invest in the long run. With COVID 19, crude demand is likely to be lower for in foreseeable future. While HPCL will continue to give good dividend returns, it will likely not give good returns in the short term.



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Prateek Goel
Co-founder of Investeek, Prateek has been investing in the stock markets since 2006 and has beaten the NSE/BSE on a consistent basis. At the age of 24, he was also featured in India Today for his expert insight on gold trading.
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