HINDPETRO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.0

📊 Core Financials:

- Quarterly PAT at ₹3,830 Cr vs ₹4,371 Cr previously → slight decline but overall strong profitability.

- ROCE at 11.8% and ROE at 16.9% → moderate efficiency.

- Debt-to-equity ratio at 1.16 → relatively high leverage compared to peers.

- Cash flows supported by strong earnings, dividend yield at 2.28% adds investor appeal.

💹 Valuation Indicators:

- Current P/E: 6.87 vs Industry P/E: 11.3 → undervalued compared to sector.

- P/B ratio: ~1.9 (₹470 / ₹244) → reasonable.

- PEG ratio: 1.24 → fair valuation relative to growth.

- Intrinsic value appears higher than CMP, suggesting undervaluation.

🏢 Business Model & Competitive Advantage:

- Hindustan Petroleum (HPCL) operates in refining, marketing, and distribution of petroleum products.

- Competitive advantage lies in strong retail network, government backing, and integrated operations.

- Market cap of ₹99,901 Cr reflects significant presence in the energy sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹470 is above DMA 50 (₹456) and DMA 200 (₹421), showing technical strength.

- RSI at 54.0 indicates neutral momentum.

- Suggested entry zone: ₹440–₹460.

- Long-term holding recommended due to undervaluation, strong cash flows, and dividend yield, though debt levels need monitoring.

Positive

• Undervalued compared to industry P/E (6.87 vs 11.3).
• Strong EPS of ₹68.5.
• Dividend yield of 2.28% provides steady returns.
• Quarterly profit variation of 507% indicates strong turnaround performance.

Limitation

• High debt-to-equity ratio (1.16).
• Quarterly PAT declined from ₹4,371 Cr to ₹3,830 Cr.
• ROCE (11.8%) is moderate compared to industry leaders.

Company Negative News

• DII holdings reduced by -0.92%.
• High leverage may limit flexibility in volatile crude price environments.

Company Positive News

• FII holdings increased by 0.93%.
• Strong profit variation (507%) highlights operational recovery.

Industry

• Oil & gas industry remains cyclical, influenced by global crude prices and government policies.
• Industry P/E at 11.3 indicates moderate valuation compared to HPCL’s lower P/E of 6.87.

Conclusion

⚖️ Hindustan Petroleum shows undervaluation with strong EPS, dividend yield, and profit growth momentum. Debt levels are relatively high, but fundamentals remain solid. Entry is favorable around ₹440–₹460 for long-term investors, with potential for value unlocking as the energy sector stabilizes.