Hindustan Petroleum Corporation Ltd.’s (HPCL) shares increased by more than 7% on Wednesday as the company’s September quarter earnings were driven by significant increases in Marketing inventories. In what appears to be a nine-day winning streak, the HPCL stock is up 23.46 percent. While HPCL’s stronger marketing margins exceeded projections, analysts noted the company’s refining margins were in line with expectations.

The completion of a number of existing projects, including the expansion of the Bhatinda Refinery, the Vizag refinery, and the new Rajasthan (Barmer) refinery, which is scheduled for May 2024, according to analysts, is Anticipated to propel growth throughout the ensuing three to five years.

In addition, “HPCL is engaged in petchem projects, such as forming joint ventures to develop a 4.6 mmtpa petrochemical capacity by FY25E. With this strategic move, the corporation hopes to establish itself as India’s second-biggest producer of petrochemicals, according to Motilal Oswal. At Rs 309, this brokerage values HPCL’s shares.

By January or February of 2024, the Vizag refinery’s mechanical completion is anticipated to be finished. The refinery will have the greatest diesel yield in the nation after expansion, and upon completion of the bottom upgrade unit, management anticipates incremental GRM of $3–4 per barre.

The state-run oil marketing company’s shares increased 7.35% on Wednesday, reaching a peak of Rs 299.15 on the BSE.

According to Emkay Global, HPCL’s Q2FY24 standalone Ebitda and profit statistics exceeded its projections by a significant margin, primarily due to gains in marketing inventory of Rs 1,200 crore at implied marketing margins that were 14% higher than anticipated and other expenses that were 27% lower than anticipated.

“Marketing outperformance was in line with peers’, but reported GRM was less than our forecast of $17 per barrel, at $13.3. QoQ, gross/net debt remained unchanged. In Q2, HPCL ran the Vizag refinery at 11 mm tpa; starting in Q3/early-2024, 13.5 mm tpa is anticipated. We increase FY24/25E EPS by 41% and 21%, respectively, in accordance with current trends.

The firm stated, “We maintain our HOLD position on the stock and roll over our Sep-24E target price of Rs 305 per share, an increase of 13%.”

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