This Multibagger PSU Stock is Set to Approve Bonus Shares Soon

We all like weekends. Two days off after a long work week is just what we need. But you know what's better than a weekend? A long weekend! A weekend is good but a long weekend is more fun.

Just like people look forward to an extra day off from work, investors also look forward to companies for such an extra treat.

In stock market terms, they are called bonus shares.

Bonus shares are free shares that shareholders receive against shares they currently hold.

For investors seeking such perks Hindustan Petroleum (HPCL), a PSU refinery, is poised to discuss bonus shares, adding to the excitement for investors seeking such perks.

• Hindustan Petroleum Corporation Limited (HPCL) will hold a board meeting on 9 May 2024, to consider and approve the issue of bonus shares to the company's shareholders.
• The record date for the bonus issue, if approved, is yet to be determined.

The decision aims to enhance liquidity and encourage broader shareholder participation in the company.

This won't be the first time the PSU refinery giant has issued bonus shares. If approved, this will mark HPCL's third issuance of bonus shares to shareholders.

Previously, in 2016, bonus shares were issued at a ratio of 2:1, providing two free shares for every one held.

Similarly, in 2017, the company approved a bonus issue at a ratio of 1:2, granting one share for every two held by shareholders.

Furthermore, the board will review the final dividend for the FY24, alongside its financial results for the March 2024 quarter.

A Close Look at the Financials

For the December 2023 quarter, the company reported a 2% YoY rise in revenue at Rs 1.1 trillion (tn). While its net profit for the quarter tripled to Rs 5.3 billion (bn).

For FY23, the company recorded a total revenue of Rs 4,149.2 bn, up 27.4% YoY from the previous year. Between FY21 and FY23, the company posted a CAGR growth of 28.4% in its revenue.

Increased demand significantly contributed to the company's improved sales volume and subsequently, revenue.

However, the profit trajectory followed a different path, steadily declining and culminating in a net loss of Rs 69.8 bn in FY23, in contrast to the profit of Rs 106.6 bn recorded in FY21.

The surge in crude oil prices exerted pressure on marketing margins, which couldn't be offset by refining margins, resulting in a net loss in FY23.

Similarly, the company experienced a consistent decline in net profit margin, reaching a negative net profit margin of 1.7 in 2023.

HPCL Financial Snapshot (2021-23)

Particulars	31-Mar-21	31-Mar-22	31-Mar-23
Total Revenue (Rs in bn)	1,959.20	3,256.90	4,149.20
Revenue Growth (%)	-	66.2	27.4
Net profit (Rs in bn)	106.6	72.9	-69.8
Net profit margin (%)	5.4	2.2	-1.7

Data Source: Equitymaster

Going forward, the company is expected to report moderate profits in the medium term due to healthy refining operations and a diversified product portfolio.

What Next?

Going forward, the company has outlined an estimated capital expenditure plan of Rs 750 bn over the next five years.

HPCL has big plans towards the EV charging space.

It plans to increase its refining capacity to 45.3 MMT by financial year 2028.

The company is also investing in expanding its pipeline network and enhancing its presence in petrochemicals, LNG, logistics, EV charging stations, retail chains, hydrogen, and fuel cells.

At present, it has a renewable energy capacity of 184 megawatts (MW), and it plans to increase it to 2.4 GW by FY28.

HPCL also has a green hydrogen plant of 3.5 tonnes per annum (TPA) and aims to expand it to 16,870 TPA by FY28.

Also, HPCL aims to achieve a 20% ethanol blending target (E20) by 2025.

All this shows that the company is gearing up for multi-legged growth.

With an increase in global demand for oil on the back of high industrial activity and growing domestic demand, the revenue and profit of oil marketing companies is expected to go up.

How HPCL Shares have Performed Recently

HPCL shares have gained by more than 13% in past month. Over the past six months, the company's shares have gained 75.6%.

On a YTD basis, the shares of the company are trading 31% higher. While it has given a multibagger return of 106% in past one year.

HPCL touched its 52-week high of Rs 594 on 16 February 2024 while it touched a 52-week low of Rs 229.2 on 26 October 2023.

About HPCL

HPCL is a Maharatna company involved in the refining of crude oil and the marketing of various petroleum products.

This extensive range includes, diesel, kerosene, liquefied petroleum gas (LPG), lube oils, petrol, aviation turbine fuel (ATF), and more.

As the company is among the top three public OMCs, HPCL has a significant 24% market share in the domestic petroleum marketing business in India.

The company's diverse product portfolio and substantial market presence solidify its position as a key player in the Indian energy sector

For more details about the company, you can have a look at the HPCL fact sheet and quarterly results on our website.

You can also compare HPCL with its peers:

HPCL vs BPCL

HPCL vs Reliance Industries

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