Share price of Hindustan Petroleum Corp Ltd (HPCL) fell in early trade after the oil marketing company announced a 99 per cent drop in its net profit for the quarter ended March. HPCL attributed the fall in net profit to a plunge in refining margins and rise in inventory losses due to a sharp decline in international oil prices. HPCL share price opened 2.38% lower at Rs 204.90 against previous close of Rs 209.90 on BSE.
The stock trades higher than 5 day, 20 day, 50 day and 100 day moving averages but lower than 200 day moving averages. HPCL share has fallen 26.56% during one year and declined 18.13% since the beginning of this year. However, the stock has gained 14.16% during a month.
Total 4.10 lakh shares changed hands amounting to turnover of Rs 8.83 crore on BSE. However, the share was trading 3% higher at Rs 216.80. Market cap of the firm rose to Rs 33,006 crore on BSE. Net profit in Q4 fell to Rs 27 crore against net profit of Rs 2,970 crore in the corresponding period a year ago.
"The drop in net profit was mainly because of inventory losses and exchange rate fluctuations," HPCL Chairman and Managing Director MK Surana said. The company logged an inventory loss of Rs 4,113 crore in Q4 compared with an inventory gain of Rs 1,224 crore in the same period a year ago.
An inventory loss is booked when a company buys raw material (crude oil) at a particular price but by the time it is able to ship it to the refinery and process it, international rates have fallen. As refinery-gate prices are aligned to prevailing benchmark international rates, an inventory loss is booked. Inventory gain is booked if the reverse takes place.
The company also suffered a foreign exchange loss of Rs 975 crore in Q4 compared to a gain of Rs 256 crore in January-March 2019.
For the fiscal ended March 31, 2020, the firm clocked a 60.56 per cent year-on-year fall in its consolidated net profit at Rs 2,638.73 crore for against consolidated net profit of Rs 6,690.63 crore for 2018-19 fiscal.
Revenue of the oil marketing company fell 3 per cent to Rs 2,89,423.67 crore in FY20 as compared to Rs 2,98,675.40 crore in the previous fiscal.
By Aseem Thapliyal