The state-owned oil company, Hindustan Petroleum Corporation Ltd (HPCL), declared their Q1 FY21 results on Thursday. HPCL reported a YoY 262% rise in net profits, from Rs 776.9 crore to Rs 2813 crore. The reported numbers are better than what the market estimated. You can find the results here.
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HPCL is an Indian oil and natural gas company. It is a government-owned entity which is headquartered in Mumbai. HPCL owns 2 major refineries; one in Mumbai and another in Visakhapatnam. It has a pipeline network of more than 3370 kilometres, the second largest in India. Products of HPCL are Fuel oil, Lube oil base stock, high sulphur gas oil, etc.
Even though the company declared a 34% fall in revenue, net profits jumped three times. Where oil exploration companies like ONGC are suffering due to low crude oil prices, oil marketing and distribution companies like HPCL are cherishing it.
The fall in crude prices have significantly decreased the company’s spending on raw materials. Last June, HPCL reported total expenses of Rs 74,188.01 crore. This quarter, the total cost has decreased to just Rs 42,941.72 crore. The company has stated that they have enough cash and thus they would like to continue with all their investment plans.
“Covid-19 did have an impact on the sales of the corporation in the months of April and May 2020 though substantial recovery was seen in June 2020. In the assessment of management, the disruption on account of COVID-19 could have near term Impact, the situation would demand constant management attention and with the phased opening up of various sectors of the economy. On the CAPEX* front, the corporation expects to go ahead with its committed projects,” the company said.
(*CAPEX = Capex is Capital Expenditure. It is the money which the company wants to spend to buy or maintain fixed assets. It includes the company’s long-term expenses in assets like buildings, lands, vehicles, etc.)
In the anticipation of better results, HPCL’s share price closed 1.71% higher at Rs 216. With lockdown being lifted, people are back to using their vehicles. This will increase the demand for fuel. Thus, HPCL is hoping to get another strong quarter again.