Hindustan Petroleum Corporation Limited (HPCL), one of India's leading oil and gas companies, has stated that potential US secondary sanctions deterring Russian crude purchases would not significantly impact the company's earnings.

Limited Exposure to Russian Crude

HPCL Chairman Vikas Kaushal revealed that Russian crude represented only 13% of HPCL's refining portfolio in the April-June quarter. This percentage has decreased from the previous year due to economic rather than geopolitical reasons.

US Sanctions and Tariffs

The United States has imposed 25% tariffs on India for buying Russian crude, effective August 27, adding to previously announced 25% tariffs. Despite these measures, HPCL maintains that the impact on their earnings would be minimal.

No Government Directives

HPCL has received no government guidance to avoid Russian oil and remains free to make economically-driven purchasing decisions. This aligns with the company's earlier statement during an investor conference call, where they confirmed no specific government orders concerning Russian oil purchases.

Refinery Operations

The company primarily used Russian oil at its Visakhapatnam refinery but has recently found other crude sources more attractive. This shift is based on economic considerations rather than geopolitical pressures.

Potential Impact on Indian Refiners

An analyst noted that Indian refiners could potentially lose $1.00 per barrel in gross refining margins due to the sanctions. However, HPCL is expected to be the least impacted among Indian refiners due to its minimal refining portfolio compared to its marketing volume.

Financial Performance

While addressing the Russian oil situation, HPCL also reported its recent financial performance for the quarter ended June 30:

Operational Highlights

The company shared key operational data for the quarter:

As global energy markets continue to evolve, HPCL's approach to oil procurement and its overall business strategy will likely remain of interest to investors and industry observers alike.

Hindustan Petroleum Corporation Limited (HPCL), one of India's leading oil and gas companies, has reported a robust financial performance for the first quarter, alongside a significant decision by its board to approve a substantial borrowing limit.

Financial Highlights

HPCL's financial results for Q1 showcase a remarkable improvement across key metrics:

• EBITDA: The company reported an EBITDA of ₹76.00 billion, a significant increase from ₹58.00 billion in the previous quarter.
• EBITDA Margin: Improved to 6.36% from 4.93% quarter-on-quarter.
• Net Profit: Surged to ₹43.70 billion from ₹33.50 billion in the previous quarter.
• Revenue: Slightly increased to ₹1.19 trillion from ₹1.18 trillion quarter-on-quarter.

Operational Performance

The company's operational metrics also showed strong results:

• Refinery Throughput: HPCL achieved a throughput of 6.66 Million Metric Tonnes (MMT), representing a 15.6% year-on-year growth.
• Capacity Utilization: Refineries operated at 109% of their nameplate capacity.
• Market Sales: Reached a record high of 13.04 MMT (including exports), growing by 3.2%.

Gross Refining Margin

HPCL's average Gross Refining Margin (GRM) for the quarter stood at $3.08 per barrel, indicating the company's refining efficiency in a challenging market environment.

Board Approves Borrowing Limit

In a significant move, HPCL's board has approved a borrowing limit of up to ₹100.00 billion. This decision provides the company with financial flexibility to support its ongoing operations and future growth initiatives.

Segment Performance

The downstream petroleum segment, HPCL's primary business, reported a profit before tax, interest income, interest expenditure, and dividend of ₹6,144.10 crore for the quarter.

Market Position

HPCL continues to strengthen its market position:

• Petrol (MS) Sales: Achieved highest-ever quarterly sales of 2.62 MMT, growing by 5.4%.
• CNG Sales: Recorded the highest quarterly volume of 310 TMT, with a 22.1% growth.
• Aviation Fuel: Sales reached 291 TMT, registering an 11.4% growth and maintaining continuous market share gains.

Strategic Initiatives

The company has launched several strategic initiatives to enhance profitability and efficiency:

• Project Samriddhi: An EBITDA improvement program targeting a margin improvement of $0.50 per barrel.
• Project Abhyuday: Focused on increasing throughput per retail outlet.
• Digital Transformation: Implemented cloud-based CRM, Central Energy Monitoring System, and Hyperlocal search Marketing to increase efficiencies.

Sustainability Efforts

HPCL continues to make strides in sustainability and energy transition:

• Commissioned 1 Compressed Biogas (CBG) plant during the quarter.
• Achieved 5.6 MWp mechanical completion for the Delhi Greening Project.
• Added 33 new CNG outlets, bringing the total to 2,071.
• Solarized 90 additional retail outlets, with 94% of outlets now powered by renewables.

HPCL's strong Q1 performance, coupled with the board's approval for a significant borrowing limit, positions the company well for future growth and expansion in India's dynamic oil and gas sector.