Net sales (including oil bonds worth Rs 1,899 crore), however, grew 22.4 per cent to Rs 27,117 crore. HPCL had received oil bonds worth Rs 1,026 crore in the December 2006 quarter. Nevertheless, the operating profit margin declined 40 basis points y-o-y to 0.5 per cent in Q3FY08. In the September 2007 quarter, too, HPCL's operating profit margin had declined 160 basis points to 5.4 per cent. Meanwhile, the company's under-recovery on petrol was estimated at Rs 7 per litre (prior to subsidy sharing) in Q3FY08, and Rs 8 per litre on diesel, according to analysts. Total sales, including exports, were 6.43 million tonnes as compared with 5.6 million tonnes in Q3FY07. To offset the company's under-recoveries, upstream players like ONGC provided Rs 1,482.5 crore in Q3FY08 as compared with Rs 553 crore in the corresponding quarter last financial year according to the subsidy-sharing formula. A small cushion for HPCL's margins also came from strong gross refining margins (GRM) in the refinery business - the company's crude throughput was 4.32 million tonnes as compared with 4.16 million tonnes in Q3FY07. |
| The GRMs at the Mumbai refinery were $6.17 per barrel in the first nine months of FY08 as compared with $4.86 per barrel in the previous year, the company highlighted. |
| Mounting under-recoveries had resulted in HPCL reporting a loss before taxes of Rs 21.86 crore in Q3FY08 as against a profit of Rs 162.7 crore in the quarter last year. |
| Going forward, the uncertainty regarding the hike in retail petroleum product prices will result in a difficult operating environment for the company. |
| At Rs 256, the stock is discounted 6 times estimated FY08 and 6.6 times FY09 earnings. |
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