PSU stock jumps after board approves ₹4,679 Cr project in Mumbai refinery

A Maharatna PSU stock engaged in the business of refining crude oil and marketing of petroleum products is drawing attention following the approval of the “Lube Modernization and Bottoms Upgradation Project” at the Mumbai Refinery with an estimated cost of Rs.4,679 crore. 

Price Variation 

During Tuesday’s trading session, the Hindustan Petroleum Corporation Ltd share price surged slightly by 0.6 percent, reaching an intra-day high of Rs.409.80 per share, up from its previous close of Rs.407.10 apiece. The price has since retreated and is currently trading at Rs.406.20 per share. 

What happened 

Hindustan Petroleum Corporation Ltd’s Board has approved the “Lube Modernization and Bottoms Upgradation Project” at the Mumbai Refinery. The project aims to boost Lube Oil Base Stocks (LOBS) production from 475 KTPA to 764 KTPA, including the production of higher-grade Group II+ and Group III LOBS. 

Additionally, Bitumen production will increase by approximately 487 KTPA through the upgradation of Fuel Oil to Bitumen. The project is estimated to cost Rs.4,679 crore, with mechanical completion scheduled for 36 months and an additional 3 months for commissioning, starting from the Board approval date. 

Production Capacity 

Refinery throughput reached 12.06 million metric tons, operating at 103.7 percent of its installed capacity. In Q2, throughput stood at 6.3 million metric tons, reflecting a capacity utilization of 107.7 percent. 

The processing basket was expanded with the addition of new crudes, bringing the total to approximately 30. However, gross refining margins (GRMs) declined to $3.12 per barrel, down from $13.33 per barrel in the previous year, primarily due to lower international benchmark prices. 

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Manufacturing Facilities 

HPCL operates two major refineries, the Mumbai Refinery, located on the west coast, with a refining capacity of 7.5 million metric tonnes per annum (MMTPA), and the Visakhapatnam Refinery on the east coast, which has a capacity of 8.3 MMTPA. 

In addition to these, HPCL holds a 16.95 percent equity stake in Mangalore Refinery and Petrochemicals Ltd (MRPL). The company is also part of a joint venture with Mittal Energy Investments Pte. Ltd. in the Guru Gobind Singh Refinery at Bathinda, which has a refining capacity of 11.3 MMTPA.

Financial Performance 

In its financial update for the quarter ending September 2024, Hindustan Petroleum Corporation Ltd reported revenue from operations of Rs.99,977 crore, marking a 4.4 percent increase from Rs.95,752 crore in Q2 FY24. 

Net profit saw a significant decline, dropping to Rs.143 crore from Rs.5,827 crore in the same period, primarily due to a reduction in other income, along with higher expenses and depreciation. 

Company Overview 

Hindustan Petroleum Corporation Limited (HPCL) is a leading public sector undertaking in the petroleum and natural gas sector, based in Mumbai, Maharashtra. Over the years, HPCL has grown into a significant player in the refining and marketing of petroleum products, offering a wide range of services, including crude oil refining, transportation, and the production of various fuels and lubricants. 

Written by – Siddesh S Raskar 

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