Rajasthan refinery ramp driving upside, but Q2 margins compressed 6% YoY

Q2 EBITDA INR9,822 Cr vs. Q1 loss; PBT INR6,768 Cr but PAT only INR3,438 Cr (delivered INR3,625 Cr)

Oct at ~₹16+ GRM (vs ₹12 in Q2), 400 TMT expected Oct, on track for ₹4,000 Cr monthly

Currently $0.7-1 uplift, acknowledged delays/complexity; management cautious on timing, no specific end date

Only ₹327 Cr accrued so far (~$0.18/barrel); ₹600-700 Cr locked in on run-rate basis

Revenue up 26% but PAT down 6.1% YoY; margin compression from freight cost doubling, LPG under-recovery

85-90% by Q3, full by Q4 stands; now at ~60% in Oct (on track). Timeline slipped from earlier hope but communicated.

₹327 Cr accrued vs ₹1,500 Cr target (22% at half-year). Run-rate ₹600-700 Cr locked suggests ₹1,500 Cr achievable but timeline stretched.

Interest cost 105 bps lower (~INR470-500 Cr/year benefit); equity infusions, subordinate-to-equity conversions reducing leverage.

Currently $0.7-1 uplift vs $2-3 target. Management acknowledged delays in tech stabilization; no hard end date.

Crude sourcing is highly volatile, DAP basis now standard. Timing/shipping disruptions create arbitrage. Difficult to forecast specifically but we manage opportunistically.

Carried more inventory end-June due to RUF ramp delay; marked-to-market inventory losses June/July, then benefited from lower-priced opening inventory in July. Refining strong July-August.

Subsidy recognized by government in past, monies given on entire thing. Currently recognized buffer. Not appropriate forum for government dialogue; assured management efforts underway.

High-pressure, high-temperature reaction; hardest bottom of barrel work. Breaking up molecular chains. Digital twin deployed, detecting parameters earlier. Stabilization period long; hoping March delivery, no screenings if tech unstable.

Projection not done yet; currently focused on commissioning. Post-stabilization, will address debt repayment. Next quarter will give broad sense on how debt repayment would happen.

HRRL is first year, not giving anything yet; consolidated negative. HMEL & MRPL contributed INR1,300 Cr & INR1,300-1,400 Cr respectively (HPCL share ~1:3 ratio).

Contract has penalty clauses; not invoking them (licensors working closely). Interest rates lowered despite restructuring from original consortia. Not worried on tech—just needs stabilization time. Will discuss debt ratios next call.

Initial long-term contracts slowly thinned due to no over-commit; recent disruptions. Now 2-3 spot cargoes monthly. Opportunity cargo at discount 3 weeks ago (picked up, gave good margin). Mix of long-term + spot; terminal + gas gives flexibility.

Read reports—golden era for refining. Diesel cracks, product cracks high. Not forecasting specifics. Rajasthan all-in refinery; won't need outside product. Portfolio soon self-sufficient.

Roughly 30, 35 days East Coast, ~45 days HRRL (pipeline transfer). Ample inventory to cover. Not material impact. Keep 20 days product, crude, ecectera.

Management stated no formal guidance. Implied bullish via Rajasthan ramp (₹4,000 Cr/month Oct), but no specific FY27 number.

No specific margin %; management claimed 'golden era for refining' but cautious on commodity volatility. Petchem upside from DFCU late FY28.

Reaffirmed prior call guidance. Rajasthan ~₹79.9K Cr project; management not specifying annual FY27/FY28 capex explicitly, deferring to next call.

Rajasthan at 60% utilization (Dec commission now vs earlier hope). Visag VGO-HDT uplift at $0.7-1 vs $2-3 target; tech delays acknowledged, no hard end date.

Revenue +26% YoY but PAT -6.1% YoY. Freight costs doubled Q1→Q2 (~INR245/cyl under-recovery in Q2 vs INR327 in Oct). Crude sourcing 'very unpredictable, very volatile.' Brent at $114 abnormally high.

Rajasthan ₹79.9K Cr project; ₹300-400 Cr left for commitment on entire project financing. Debt restructuring ongoing but capex-heavy next 2 years. Interest savings (105 bps relief) offset by potential capex overruns.

Samriddhi 2.0 targeting ₹1,500 Cr run-rate savings; only ₹327 Cr accrued at Q2 (22% of target). ₹600-700 Cr locked in on run-rate suggests delay or lower ultimate accrual.

Crude volatility, brent at $114 abnormally high. Ukraine war 7-8 months ongoing; supply disruptions. LPG subsidy policy risk if government cuts support post-March 2025.