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HPCL Earnings Preview: One-time grant may cushion losses for now

HPCL Earnings Preview: One-time grant may cushion losses for now

HPCL Earnings Preview: One-time grant may cushion losses for now
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By Sonal Bhutra   | Hormaz Fatakia  Nov 3, 2022 9:02:15 AM IST (Published)

Similar to Indian Oil Corporation, HPCL may also receive a one-time grant for LPG subsidy, which may cushion the company's net loss for the quarter.

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Hindustan Petroleum Corporation Ltd., one of India's largest oil refiners is likely to report another net loss for the September quarter. However, the net loss is likely to narrow compared to the June quarter.
HPCL reported a record net loss of Rs 10,196 crore during the June quarter.
According to a CNBC-TV18 poll, HPCL's net and operating losses are likely to narrow from the June quarter while revenue may decline on a sequential basis.
The EBITDA loss is likely to be driven by negative marketing and weak refining margins. For the September quarter, refining margin is likely to decline to $5.5 per barrel, compared to $16.7 per barrel during the June quarter.
HPCL is likely to report an inventory loss of Rs 2,800 crore during the quarter. Inventory losses are seen both in the company's refining and marketing segment. An inventory loss occurs when a company buys a product at a higher price, but is forced to sell it at a lower price.
OMCs have not been able to raise prices recently to aid the government combat inflationary pressures.
HPCL has a higher exposure to the marketing segment which contributed to its record loss during the June quarter. Back then, the company mentioned that Oil Marketing Companies are taking a loss of Rs 15 per litre on marketing margins.
CNBC-TV18 had exclusively reported earlier that Oil Marketing Companies may seek government intervention as they are weighed down by fuel under recoveries. Sources said that the combined under recoveries for LPG and fuel are over Rs 1 lakh crore.
Similar to Indian Oil Corporation, HPCL may also receive a one-time grant for LPG subsidy, which may cushion the company's net loss for the quarter.
Throughput, or the amount of petroleum products that move through a given facility over a period of time is likely to be flat compared to the June quarter at 4.9 MMT.
Shares of HPCL have declined nearly 30 percent this year.
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