Buy HPCL; target of Rs 1490: Motilal Oswal

HPCL’s reported 1QFY17 EBITDA of INR 35.6b (est. INR 29.5b, +20 YoY, +38% QoQ) led by (a) GRM at USD6.8/bbl (inv. Gain of USD2/bbl) and (b) product inventory gains of INR 11b (est INR 8b). PAT was further helped by lower depreciation at INR 6.1b (-19% YoY, -10% QoQ) and stood at INR 21b (est. of INR 16.5b; +32% YoY, +35% QoQ). While the GRM have softened recently, we note that the auto fuel marketing margins are inching higher (up INR 0.5/ltr in the last two fortnights) and should partly compensate for lower GRM in the near term. Valuations undemanding with dividend yield of 3.5%. Maintain Buy. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.