HPCL Reaches Target Price of Rs 455, Suggests Motilal Oswal

HPCL Exceeds Expectations in 4QFY26

Mumbai, India - Motilal Oswal's research report has revealed that Hindustan Petroleum Corporation Limited (HPCL) has exceeded expectations in the fourth quarter of fiscal year 2026. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter stood at INR104.3 billion, a 121% beat over the research firm's estimate.

The strong performance can be attributed to a higher-than-estimated marketing margin, which is likely due to inventory gains. However, the reported gross refining margin (GRM) stood 9% below the research firm's estimate at USD14.5 per barrel. Notably, the gross marketing margin, including inventory, stood at approximately INR6.2 per liter, significantly higher than the estimated INR1.9 per liter.

Key operational metrics, including refining throughput and marketing volumes, were in line with expectations. Refining throughput stood at 6.4 million metric tons, while marketing volumes came in at 13 million metric tons.

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The company's profit after tax (PAT) for the quarter also exceeded expectations, coming in 113% above the research firm's estimate at INR49 billion.

Outlook and Valuation

HPCL currently trades at 1.1 times its estimated price-to-book (P/B) value for fiscal year 2027. The research firm estimates the company to deliver a return on equity (RoE) of 16.2% in fiscal year 2028, along with a dividend yield of 5.4% for the same year. Notably, the research firm has not assumed any significant benefit from the start-up of a bottom-upgradation unit and Project Samriddhi.

Recommendation

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In light of the company's strong performance and favorable outlook, Motilal Oswal reiterates its BUY rating on HPCL with a share price target of INR455 based on a sum-of-the-parts valuation.