HPCL board approves ₹2,500 crore share buyback

State-run Hindustan Petroleum Corporation Ltd (HPCL) will launch a share buyback program shortly for its shareholders to a maximum value ₹2,500 crores, the company said today.

The board has approved a proposal to buyback 10 crore shares, which represents 6.56% equity share, at ₹250 per share, reflecting a premium of 34% to HPCL stocks' closing price on 4 November.

On Wednesday, HPCL's scrip on NSE closed 0.83% higher at ₹187.20.

"We believe that HPCL share has a lot more intrinsic value than what it is reflecting right now. HPCL has been liberal in rewarding its shareholders and buyback is one of the ways to reward our shareholders," explained MK Surana, chairman and managing director, HPCL during a media briefing while announcing the company's second quarter earnings.

During the second quarter of this fiscal, HPCL recorded Profit after Tax (PAT) of ₹2,477 crore against a PAT of ₹1,052 crore during the same period last year marking a jump of 135% over last year.

"The improvement in the profitability in spite of challenges including lockdown due to covid-19 pandemic was a result of strategic planning in refinery and marketing operation, containing the de-growth to less than the industry, efficient inventory management and effective product placement," the company said in its earnings statement.

Gross sales revenue for the company stood at ₹61,340 crore during July- September quarter versus ₹66,165 crore for the same period last year.

The company said overall sales of petroleum products has reached to the level of 98% in September 2020 compared to the sales in September 2019.

The nationwide lock down to contain the spread of the pandemic in India lead to significant demand contraction of petroleum products in April 2020 and the sales were down by over 48.5% as compared to April 2019. However, with the subsequent relaxations announced by the Central & State Governments and gradual opening up of economy, the demand of petroleum products picked up sharply.

HPCL's refineries achieved a combined capacity utilization of over 100% at its refineries by optimizing the day-to-day crude run rate and regulating the product procurements from other sources.

The HPCL refineries processed 8.03 million metric tonnes of crude during April-September, 2020 as against 8.48 million metric tonnes during the same period last year. The thruput for the quarter July to Sept 2020 was 4.06 MMT compared to 4.56 MMT last year.

The combined GRM for the period July-September 2020 is $5.11 per barrel as compared to $2.83 per barrel in the corresponding previous period. The combined GRM for the half-year April- September 2020 works out to $2.58 per barrel compared to $1.87 per barrel in the corresponding previous period.