Although the three state-owned petroleum retailing companies face similar problems, Hindustan Petroleum (HPCL) has consistently under-performed BPCL and Indian Oil. There is little to suggest that the company may outperform its peers in the near term. There are enough reasons for such an assessment. BPCL holds a successful E&P portfolio supporting its valuations while Indian Oil has gained from its large size and exposure to petrochemicals.
On the flip side, HPCL has emerged as the one which is highly dependent on government subsidies and discounts due to its significant reliance on traded goods — the quantum of petroleum products bought from other refiners at market rate to sell through its own outlets.
Nearly 59% of its FY13 revenues came from traded goods, while for BPCL this proportion was 52% and for Indian Oil only 42%. HPCL’s balance sheet is also the weakest among the three with a debt-equity ratio above 3. The company’s future plans don’t suggest this will change soon.
On the flip side, HPCL has emerged as the one which is highly dependent on government subsidies and discounts due to its significant reliance on traded goods — the quantum of petroleum products bought from other refiners at market rate to sell through its own outlets.
Nearly 59% of its FY13 revenues came from traded goods, while for BPCL this proportion was 52% and for Indian Oil only 42%. HPCL’s balance sheet is also the weakest among the three with a debt-equity ratio above 3. The company’s future plans don’t suggest this will change soon.
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