Target: ₹580/₹687

CMP: ₹494/605.70

HPCL: Sharply turning around its fortunes, Hindustan Petroleum’s FY24 EBIDTA/PAT was ₹24,800 crore/₹14,600 crore (from FY23’s ₹7,500 crore/₹8,900 croreloss). Q4 profit was ₹2,840 crore, slightly below our estimate due to lower GRMs. Ahead, we expect crude oil prices to be range-bound at $80-90/bbl, which would benefit OMCs with steady refining and marketing earnings.

The Corporation would benefit from the start of its Vishakhapatnam refinery expansion in Q3 FY25, as refining margins are likely to be high (an added $2-3/bbl). We reiterate a Buy, with a lower TP of ₹580 (₹643 earlier), 5.5x FY24e EV/EBITDA.

BPCL: A record year, BPC’s FY24 EBITDA/PAT were ₹44,100 crore/₹28,470 crore (₹10,900 crore/₹3,500 crore the previous year), which resulted in debt dropping sharply to ₹18,700 crore (₹37,000 crore in FY23). Q4 earnings were a slight miss due to lower refining margins. For FY25, we have modelled conservative refining/marketing margins.

The Corporation is our preferred pick of peers, given its strong BS and potential monetisation of overseas E&P assets such as the Mozambique LNG asset in CY24.

We largely retain our estimates and Buy rating, and 12-month TP of ₹687.

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