HPCL's latest earnings show a significant operating loss of ₹161.3 billion, higher than the expected ₹117 billion. The loss mainly stems from marketing margins that were weaker than predicted. The company’s gross marketing margin (GRM) excluding SAED impact was 33% higher than forecast, at USD 23.8 per barrel.
Even though the GRM was better than expected, the overall marketing margin, including inventory, turned negative at about ₹14.9 per litre, compared with an estimated negative ₹9.4 per litre. This shows that the company faced challenges in converting sales into profit.
LPG recovery was also a concern, with a shortfall of ₹56 billion versus ₹13.4 billion in the previous quarter. This decline in LPG sales added to the company's bottom line.
After taxes, HPCL recorded a loss of ₹115 billion, exceeding the estimated ₹99 billion. The company’s stock is currently trading at 1.2 times its projected price‑to‑book ratio for FY28.
Analysts project that HPCL will achieve a return on equity of 17.3% in FY28 and offer a dividend yield of 5.5% for that year. Despite the losses, a BUY rating is maintained, with a target price of ₹470 based on the SoTP model.
Investors are advised to review these figures carefully and consider professional advice before making decisions.