Disappointed by PSU OMC's Q1 results, analysts now see 27% downside in this multibagger stock

Downstream oil major HPCL posted weak Q1 results with profit eroding 87.5 per cent year-on-year (YoY) in the reporting quarter. Shares of the company in the previous day's trade ahead of its results ended over 1 per cent higher at Rs 381.2.

EBITDA- a profitabilty metric also fell 56.1 per cent to Rs 2,107.6 in the June-ended quarter while it was estimated at Rs 3,375 crore during the review period. Marginss at the company shrinked sharply from 4.2 per cent to 1.85 per cent as against 4.2 per cent in Q1FY24. Profit at the company too took a severe hit and came in lower by 87.5 per cent on-year to Rs 355.8 crore.

Global brokerages on HPCL after its Q1 show:

Jefferies maintained its underperform rating on the stock with the target raised to Rs 315. As per the brokerage the company posted better results ahead of estimates, however, the outlook remains weak. Refining margins has been below, while marketing margin has been ahead of estimates. Profitability susceptible to crude price volatility and HPCL most levered to marketing, it added.

JP Morgan on the other hand maintained neutral call on the stock with the target cut to Rs 335. The brokerage held that the moderate miss on Gross Profits translated to sharp bottom line miss due to co’s higher-than-peers P&L leverage. Higher operating leverage can help earnings surprise if oil prices fall &retail prices remain stagnant, it added.

On the other hand, Citi continued with its buy rating on the counter, though it views a downside of nearly 27 per cent from the last close. The target given out by the brokerage is Rs 280. 
 

Anil Singhvi's dual strategy of Sell and Buy in HPCL

Zee Business Managing Editor Anil Singhvi has advised to sell HPCL futures maintaining a stop loss of Rs 392 for a target of Rs 373, 368 and 365 at a price of Rs 383.05. Further Anil Singhvi said even as the stock is technically in a strong uptrend and there is scope of profit booking after weak results. Nevertheless, there is a buy on dip opportuntity in the stock as crude price has fallen below $80 per barrel and also at the current valuations the stock is cheaply price.

So, given the bullish stance on energy stock, the expert recommends buying  in the stock near the support level.