Hindustan Petroleum Corp Ltd
NSE:HINDPETRO
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Hindustan Petroleum Corp Ltd
Earnings Call Analysis
Q1-2025 Analysis
Hindustan Petroleum Corp Ltd
Hindustan Petroleum Corporation Limited (HPCL) reported impressive results for the Q1 FY '25, despite a challenging environment. Revenue from operations surged to INR 1,20,859 crores, with the company's sales volume hitting an all-time high for any quarter. Notably, HPCL increased its market share, indicating robust sales across various product segments like petrol, diesel, and lubricants. The overall throughput also improved, even with a scheduled shutdown at the Mumbai refinery, showcasing the company's operational resilience.
The quarter was marked by suppressed global refining margins (GRMs), with the Singapore GRM around $3.5 per barrel. However, HPCL managed a higher GRM of $5.5 per barrel. This performance was achieved amidst rising crude prices, which increased operational costs and impacted refining margins. The Indian demand for diesel and petrol remains robust, growing at rates of 1.5%-2% and 7%, respectively, which bodes well for future margin stability.
HPCL faced significant under-recoveries in LPG due to controlled pricing, leading to an INR 2,400 crores hit on the EBITDA. Despite this, the company reported a resilient EBITDA of INR 2,100 crores. Historical government support, such as the INR 5,600 crores received previously, provides a safety net for future under-recoveries, reinforcing HPCL's financial stability.
Several major projects are on the horizon for HPCL, slated for completion by the end of this calendar year. These include the Vizag residual upgradation project (VREP), the LNG regasification terminal at Chhara, an LPG Cavern storage facility at Mangalore, and a 2G ethanol plant at Bathinda. The VREP alone is expected to boost GRMs by over $8 per barrel upon stabilization. Additionally, HPCL is progressing towards commissioning the Barmer refinery within this financial year, adding significant capacity and enhancing operational throughput.
The company is eyeing a consolidated EBITDA target of INR 40,000 crores by FY '28, driven by stabilized projects and increased throughput from new capacities. Current and future projects, along with a robust demand environment in India, are expected to sustain GRMs in the range of $5 to $8 per barrel. Moreover, HPCL plans to manage its debt levels effectively, leveraging internal cash generation for upcoming investments without significantly increasing existing debt levels.
HPCL is also investing in technological advancements like AI for improving operational efficiency and demand forecasting. The company is exploring initiatives in green hydrogen production, albeit at a higher cost currently, with expectations of reduced costs as power rates decrease. These efforts underline HPCL's commitment to sustainability and operational excellence.
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Ladies and gentlemen, good day, and welcome to the Hindustan Petroleum Corporation Limited Q1 FY '25 Earnings Conference Call hosted by Antique Stockbroking. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Varatharajan from Antique Stockbroking. Thank you, and over to you, sir.
Thank you, Sejal. Good afternoon, everyone. It's my pleasure to welcome all the participants and the top management of Hindustan Petroleum Corporation Limited to this 1Q results call. We have with us Mr. Pushp Kumar Joshi, Chairman, Managing Director; Mr. Rajneesh Narang, Director, Finance; Mr. S. Bharathan, Director, Refineries; Mr. Amit Garg, Director, Marketing; and Mr. K. Vinod, Executive Director, Corporate Finance. A very warm welcome to all of you. I would like to hand over the floor to Mr. Pushp Kumar Joshi for his initial comments. Over to you, sir.
Very good afternoon. Thank you, Varatha. Very good afternoon to all my friends. And I would start by sharing the details of our performance in this quarter. And I would say that number one is that our revenue from operations has gone up. It is INR 1,20,859 crores during this quarter. Apart from that, we have gained our market share in sales of our product. Our sales has been highest ever in any quarter. Our refining throughput also is higher than the previous quarter. And this against the background that we had a shutdown in our Mumbai refinery. So despite that, our physicals, now if you see in terms of reining, in terms of our marketing, in terms of our pipeline throughput and our overall revenue from operations, they have been better than the previous quarters. And that is an indicator of the fundamentals, which we have earlier indicated, that our company now is on a very strong footing as far as our refining and marketing operations are concerned. The challenges during these quarters were that they were highly suppressed GRMs, Singapore GRMs were somewhere in the tune of $3.5 per barrel, although we have done about $5.5 per barrel in this quarter. But Singapore was $3.5, that was because of suppressed cracks of the product. The crude prices have traveled northwards, that had an impact on our GRMs as well as in terms of [ fuel loss ] for our refineries. We also had a significant separation of LPG margins and there was under-recovery in LPG, while in petrol and diesel, there was a balance. And as we look at currently, we are again back to the normal thing as far as our margins are concerned in petrol and diesel. LPG, as I said, that we had under-recoveries and there were substantial under-recoveries. But at the same time, since this is for this quarter, our experience in the past has been that this has been adequately taken cognizance of, and because this is a controlled product, we have been receiving support from government. If you would recall that we had received support to the tune of INR 5,600-plus crores in the previous instance. So we are considering that in our future plans.
Another significant thing I want to add is that, this calendar year end, we would be completing our major projects in terms of, one is Visakhapatnam refinery. Visakhapatnam refinery, we wish to share that post-expansion, all our units are stabilized, including the CDU-IV, which is the most energy-efficient CDU in the country, that is fully stabilized. Also in terms of our bottom upgradation facility, in this quarter itself, we would be achieving mechanical completion of that facility. And from third quarter onwards, as we had indicated earlier, we will have substantial gains in our GRMs that would start accruing some third quarter onwards post stabilization of our bottom upgradation facility.
Second major project would be that we would be commissioning our LNG regasification and storage terminal at Chhara that is in Saurashtra in Gujarat, that would be completed. We would also be completing our LPG Cavern storage facility at Mangalore. We will also be commissioning our 2G ethanol plant at Bathinda. All would happen before this calendar year end. And as far as our HRRL is concerned, I'm happy to share that we have achieved more than 80% completion on overall physical progress and the refining portion where the progress is plus 90%. We have been able to commission the pipeline, the off-site facilities, all the facilities which are there, which are required. So therefore, it is our target, and we are confident that by this financial year end, we would be able to commission our refining portion of HRRL, that is our Barmer refinery. Now our results, we have shared the details already in terms of our press release and things like that. I would leave the floor open to begin with for any queries which are there and subsequent any clarification, any comments which are there, we would like to do that.
I also want to add one more facet, that is regarding our lubrication business. As we had indicated that last year, in the middle of last year, we had taken the Board approval for enhancing the value of our lubes business, and we had taken the consultancy and advisory of a world-renowned consultant. The report has been submitted. That study has been over. As far as actions on that is concerned, we have already started and taken steps in terms of improving the operational efficiency, logistics, supply chain and branding. All those actions are underway.
Second is, as regards carving out, we have indicated that we have started the process that is under active consideration of the competent authorities in terms of demerging or whatever action which we have to take, that action also is in line. So that is as far as our lubricant business is concerned.
I would now invite any queries or questions which are there, and we will attempt to answer all those. Thank you very much.
[Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities.
I have 3 questions. Firstly, it's a bit of an accounting question with respect to this LPG subsidy. If you can kindly, sir, make us understand how this subsidy is accounted for our understanding is that when the surplus arises, it is put in some sort of an off-balance sheet reserve, but the losses are incurred are actually taken in the P&L. If you can confirm that my understanding is correct. That's my first question.
Yes. And the other 2 you want to...
Yes, I'll answer -- the second question was with respect to the crude costs, which you mentioned has risen in this quarter. Just wanted to get a sense of what percentage of Russian crude are you still getting and what sort of guidance, if any, you can get for the rest of the year?
And the third question was with respect to Vizag, where the throughput has stabilized at around 3 million tonnes a quarter from what we can see. From the second half, can we expect this run rate to go closer to about 3.5 million tonnes, as we mentioned that the CDU-IV now has stabilized. So will that higher throughput reflect in the second half overall throughput numbers? Those are my 3 questions.
Yes, sure. The first one regarding LPG subsidy, I would request Mr. Narang to address that. As far as the second and third questions are concerned, that is with regards Russian crude and as regards the Vizag refinery, we will address that. So first, Mr. Narang will address this question -- LPG subsidy.
Yes. Good afternoon, Mr. Sen and all the esteemed participants. As far as accounting of LPG subsidy is concerned, your understanding is right. whenever there is an over-recovery because this is a controlled product, LPG is a controlled product whereas we selling price to the end consumer is fixed by the government. Now in case the selling -- in the selling price, which the government has fixed, there is an over-recovery, that over-recovery goes and sits in the buffer account. And that has not taken into the P&L of the company. And in case there is an under-recovery like the case in this quarter, that under-recovery is accounted as part of the profit and loss account -- it gets into the P&L of the company. Now you may say why a differential treatment because -- as of now, the way the government has awarded the scheme to us is that any excess recovery needs to be passed separately. But on a short, wherever there is going to be a shortfall, there it has not been specified very clearly. However, in the past also, like our Chairman in his address has covered that we have already, we had got that INR 5,617 crores of negative buffer in the previous year. Now coming to your next question as to the crude -- the percentage of crude which has been procured from Russia. The crude which we have procured from Russia is almost 35% to 40% of our entire crude dice currently. And the same has increased substantially compared to the last year, where it was around 25%.
Now third, as regard to Vizag throughput, the Vizag throughput, you're right, is increasing. And subsequent to the commissioning of the [indiscernible] and as on date and what -- and also as regard to Q4 is concerned, we'll be taking the refinery to beyond the 14 million metric tonnes or around 15 million metric tonnes. So that would be around between 3.5 million to 4 million metric tonnes per quarter.
The next question is from the line of Sumeet Rohra from Smartsun Capital PTE.
Sir, firstly, I mean I just wanted to understand. So sir, that the LPG part is basically in the P&L, which basically then means that we have for the quarter, reported close to a INR 3,000 crores profit, which, sir, is very healthy and I mean, in a challenging environment, I mean, you guys have delivered very well. So very good on that. Sir, my question now was more towards the commissioning of the Vizag residual upgradation project. So sir, if you can please explain how much would it add to the overall GRM. And sir, secondly, on the lubricant part, now if I'm correct, our total volumes is around 650 TMT, which is like we are 3x bigger than Castrol. Now sir, today, the other companies I mentioned, its market cap is already upward of INR 25,000 crores. So sir, our lubricant business is a very valuable part of HPCL today. And the value unlocking process can unlock huge amounts of value for HPCL. So, sir, can you please share some thoughts on that? And sir, lastly, just one thing is that once our projects are commissioned, which is the Barmer refinery, the Chhara terminal, the LPG Cavern as you highlighted. So sir, then our EBITDA, our part to $5 billion EBITDA. Can you also just speak a bit on that because then investors get a lot more clarity when we get to understand numbers, it will give an extremely high amount of clarity to all the investor community, sir.
Thank you, Sumeet. Yes, as regards to what you said about the LPG under-recovery, cumulatively, as of Q1, we have a total under-recovery of almost INR 2,400 crores plus on account of the negative buffer, which had gone into our P&L. So as and when the same is settled by the government, definitely, to that extent, the profitability will improve. Now coming to the VREP, as Chairman has already covered that in this quarter, the mechanical completion of VREP would be completed. And in the next quarter, the commissioning activities would be done. Thereafter, we will start getting the benefit out of the VREP unit, which normally takes 2 to 3 months for stabilization and all. So from the last quarter onwards, we have started on a gradual basis deriving the benefit out of it. Now at a peak level, when the refinery -- when these units are fully stabilized, the incremental GRM will be is more than $8 per barrel. Now coming to your question on the lubricant business. Yes, we are going ahead with our plan for the carve-out and apart from that, even in the existing setup, we have already started taking various value accretive initiative to see that how we can bring more initiatives and all. And we can bring in new initiatives to improve the cost and other benefits we can derive out of the existing -- within the existing setup. And yes, we intend to -- at the moment, we get the approval from the concerned authority, our intention is to hit the market. And the market cap which you are referring to is definitely is where we are also eyeing that we should also get the right value for this line of business. So investment on the various new units, which are likely to get commissioned, LPG Cavern, the [indiscernible] and the other units which have been stated. Yes, definitely, all these units will add to the bottom line and we reconfirm our belief so that by '27-'28, we will have an EBITDA of almost around INR 40,000 crores, which is equivalent to the 5 million tonnes which we have been referring to in our investor presentations and also in various other meetings here we had presented this.
The next question is from the line of Maulik Patel from Equirus Securities.
Two questions. One, can you just spell out your update on the Chhara LNG terminal. The terminal commission, what's your sourcing strategy? Also, you have not spelled out the capacity to any third player. And what kind of gas requirement you will have it from Chhara to all your 3 refineries like Bathinda, Rajasthan and Mumbai?
Yes. What's the next question?
Yes. The next question is on your outlook on the refining side. I mean, I do see that because in the last couple of quarters, GRM has come down significantly, [indiscernible] distillate crack has come down. So where do you see a couple of new capacities also come up? So where do you see that GRM in the next 6 to 9 months?
Regarding the update on the Chhara terminal, as you are aware that in the month of April also, we had brought a commissioning cargo or -- because -- but the sea was quite rough over there, we couldn't commission. Anyway, we would be undertaking that activity of commissioning the terminal in the month of November or December, maybe early December, depending upon the weather conditions at the site. Now this terminal is a 5 million metric ton capacity LNG terminal. And the breakwater is also being constructed over there. So going forward, maybe at the end of the next [indiscernible] season, even the breakwater would be in place, almost around 1,000 meters of the breakwater is already completed. Around 800 more meters have to be done up, which will be done in the next season.
As regard to the total gas requirement, the captive use of HPCL refineries -- also HPCL as well as the group company is around 1.5 million metric tonnes. And we will also be booking capacity. We have already got a lot of interest from parties who are willing to book capacities in the sale. And -- but we are just waiting for the commissioning of the facility to be done, and then we will be signing the agreement for regasification.
As regards to sourcing strategy is concerned, we are already in the market for tying up long-term debt from internet players.
Mr. Maulik, does that answer your questions?
So second question is left.
As regard to the outlook on the refining front, yes, the last quarter was depressed as to the GRMs are concerned. But now currently, if you see, the crude prices have started softening. And also the crack for HSD and MS have started looking up. We expect that the crack would be -- the GRM for the refineries would be in the range of $5 to $8 per barrel. So, yes, the GRM which I'm referring to is with the current HPCL configuration with VREP and all other units, it may further increase. So we expect that there would be decent GRMs going forward from $5 to $8 per barrel.
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
One question on the current performance. Would we be able to now separate out how does the Vizag refinery margin versus Mumbai refinery margin is quarter-on-quarter changing as well as the Y-o-Y changes? The unit has stabilized and probably we are back in a time when we can share the refinery level margin?
Yes. Going forward, definitely, we are also attempting, but right now, one critical factor which is be kept in mind is that our Mumbai refinery is also having the lube refining there. So therefore, what happens is the common denominator to compare the performance can be on factors like your fuel loss, optimum utilize in terms of facility with the basic issue is that in Vizag we would have very advanced bottom upgradation facility post commissioning of VREP. In Mumbai, we do not have the bottom upgradation facility in terms of coker or residue upgradation. And second, Mumbai substantial portion is in terms of lubes. But going forward, we are measuring on the parameters like energy efficiency, in terms of the power us and all that. So that way we are trying to bring that. All I can tell you this is that, as far as our distillate yields are concerned, we would have substantially higher distillate yields at our Vizag refinery. In Mumbai refinery, they would be in terms of average [indiscernible] refineries. I would also request our Director Refineries to specifically address some issues on those if you can, Mr. Bharathan. Yes.
So Mumbai refinery makes lube oil based stock, which gives an added advantage compared to [indiscernible] refinery. And Vizag refinery, right now, we make maximum diesel and MS. So once the resid upgrader is commissioned, then it will have an additional margin of around $3 plus. So this -- all this will be seen in the coming months. And as the Singapore GRM goes up, we will also get that incremental, whatever we've seen in the international market, that additional margin will come to us also.
Sure, sir. A couple of more questions from my side. One was would you be able to indicate the inventory gains or losses during the quarter on refining as well as marketing? You mentioned that there was an impact of the higher crude price. And the third question was about the Bathinda refinery. Could you sort of share the profitability during the FY '24 as well as Q1? And how is the petrochemical utilization going there? And what is the gross margin level and EBITDA that we've achieved for Bathinda?
Yes. Coming to the inventory gain. In marketing -- yes, the marketing, there was an inventory loss of INR 245 crores; and in refinery, INR 113 crores. Now coming to the HMEL. During this quarter, HMEL had a throughput of 3.27 million metric tonnes. As regards GRM is concerned, the GRM was more than -- it was around $10.5 per barrel. And in terms of PAT, it was more than INR 300 crores. As regard the petchem is concerned, the total petchem production was 534 kt and the petchem sale was 471 kt.
Is the utilization above 90% at the petchem unit now?
Pardon?
Is utilization gone above 90% for the petchem unit?
Yes, the unit now is operating at more than 90%.
So is it EBITDA margin accretive where we assume $200 to $300 EBITDA coming from petchem unit?
Yes, yes.
The next question is from the line of Roshni from Argus Group.
I want to ask the details about the maintenance like you said happened in Q1? And do you have anything planned for the rest of the financial year in terms of maintenance?
Sure, we'll answer that. Yes.
In our Mumbai refinery, one of the true [indiscernible], we took a planned turnaround, which is completed and now running back at full capacity. Vizag refinery, we don't have any plan of any shutdown in the coming quarter. Mumbai refinery also, this year, all the turnarounds are completed. There is no more plan for any additional turnaround.
Okay. But what were the dates for this CDU maintenance?
It's already done. In April, we have completed and the unit is back online with the full capacity.
Okay. And I noticed that you bought 3 different kinds of crude for the first time this year. So any reason for this? And you have plans for any other crude this year?
These crudes are opportunity crudes, 2 of them are Russian and another one is West African crude. So we are always on lookout of opportunity crudes, whichever is available at economically, I mean, compatible numbers, we will take that. And in the coming months also, we will look for such opportunities. If it is available, we'll take any new crudes.
Okay. And could you give any details for the Chhara pipelines? From where it runs and still there -- and any -- when it will be completed totally?
The pipeline work has been completed. It has been connected from Chhara to a place called Gundala, and that is connected to the gas grid of Gujarat, that is GACL. So as far as evacuation from Chhara is concerned, the pipeline is completed. It has been commissioned. Now post commissioning of our Chhara terminal, that pipeline will be under utilization. So we will be able to ensure evacuation of all the molecules through that pipeline.
Okay. So this [indiscernible] for the Chhara, say it, only the Gujarat gas, the CGD?
No, it will be because that pipeline, it can be taken anywhere in the country. So it will be across the country. And there would be -- we will be looking for exchange arrangements because for our Vizag refinery, for our Barmer refinery, for our Mumbai refinery. So once that pipeline is -- connectivity is there, then the gas things can be taken across the country.
The next question is from the line of Mayank Maheshwari Morgan Stanley.
A couple of questions from my end. I think the first one was on the Rajasthan refinery thing. Can you just talk us through in terms of the progress on the petchem side, the CapEx you spent and how much is the debt level at the Rajasthan refinery?
Sure, Mayank. Thank you. Thank you very much. Mayank, specifically for the Rajasthan refinery, I would just read out the details to you. But -- the construction of all the process units is progressing in full swing and they have been completed. So physical progress of the process units, that is CDU/VDU, DCU, PFCCU and VGO is about 92%. Overall physical progress, including the petchem portion is about 80%. The commitment so far are INR 69,845 crores, and the CapEx so far has been INR 48,000 crores. As I had indicated that the refining portion would be commissioned in this financial year end, that is in the last quarter of this financial year, we'll be able to take the crude from our crude oil terminal facility at Mundra. Our pipelines are completed. We will also be taking [indiscernible] crude. But for commissioning, we would need the imported crude. So that we are targeting that, that would happen in the first week of March. And by end March, we should be able to start the unit as far as refining portion is concerned. The petrochemical portion, the main unit, we have achieved about 80%, 85%. The other 2 units which are lagging behind, we are catching up on those units. And our target is that post refining commissioning, in maybe another quarter or 2 quarters, we will be able to achieve mechanical commissioning of our petrochemical portion also of refinery.
Yes, great color.
Mayank, some more details Mr. Narang wants to share with you.
We have had detail of the debt [indiscernible]. The debt is around more than INR 32,000 crores, and the balance is [indiscernible] the promoters have contributed. And -- that's it. Yes.
Yes. I think the other question, sir, was just I thought I will follow up with 1 more. Just sir, I think last quarter, you had talked about that you were kind of using AI for your advantage. Any updates on that progress or what you have done anything specifically this quarter?
Yes. We are pursuing that. In fact, specifically AI is being used for the video analytics at the retail outlet. We are using it for our demand forecasting and even for various other applications. In OT, technologies are being used in refineries. We are working out with SAP also recently. In fact, we had a detailed discussion with them. And what all we can do with respect to the VPP platform of theirs, we are in discussions with them. The RPAs have been extensively deployed for various processes. So we are giving a lot of thrust to the digital transformation within the company. And this is going to be an exercise which will go on for maybe another 6 to 9 months. And the results would be visible at that time.
The next question is from the line of Gagan Dixit from Elara Securities.
Sir, my question is regarding the Chhara LNG terminal and its connectivity with the Rajasthan refinery. So would you be able to take the LNG from Chhara to the Rajasthan refinery? Or Rajasthan refinery still need to be connected with the pipeline network?
No, no, it will -- we'll be taking the LNG to the Rajasthan refinery and the pipeline connectivity is there.
Yes. And sir, this also, you say you can use for the Mumbai refinery with LNG from the Chhara. But is it that you already have some tolling agreements with the existing some LNG terminals, might be you -- might be you can't fully use? So if that would be the case with the refinery or you can just shift all the new demand to the Chhara LNG terminal?
We'll be shifting the entire demand to Chhara. We don't have -- we have not booked any capacity with any of them. We have been purchasing from various suppliers and using it in our Mumbai refinery even today. So not an issue. We have not created any obligation considering our own facility at Chhara. So we will not be -- I mean, that will not come in the way.
Yes. And second question, sir, is regarding the clean hydrogen. I can see in your earlier presentation that you're targeting something 17,000 tonnes per annum green hydrogen by FY '28. So, sir, what is your overall hydrogen requirement? And what is the percentage of that that's something again that you are targeting?
Yes. Our HPCL Vizag refinery, we have commissioned India's first green hydrogen plant in any Indian refinery, so which was commissioned this month. That is already done. Going forward, we have floated an Expression of Interest tender for buying of 5 KTPA of green hydrogen, this is in the immediate future. And in the coming years, as we indicated in '28 and by '30, we'll be further augmenting, which will be almost 5% to 10% of total hydrogen will be converted into green hydrogen.
Okay. So 17,000 tonnes is the overall -- it's 10% of the overall requirement?
Right.
But I think, there I saw, I think, news that oil marketing companies together are planning to make certain plans for the green hydrogen. I think I have read somewhere IOCL also stated that they are targeting 50% of the hydrogen should be green hydrogen by '30. So can I expect similar plan can be possible for HPCL also in future?
Yes. As a part of our Net Zero plan, we are going to convert 100% by 2040. Subsequently, we have year-wise plan. Depending on the progress and availability of technology and price of green hydrogen, we'll run the plan.
And sir, my final question is about the recent PNGRB's ruling on the product pipeline tariff. They came out, I think, news that some 75% of the freight, railway freight something, they have [indiscernible] back actually the product pipeline tariff. So how would it impact your overall this revenue from the pipeline business? Or maybe if you can give some color about it.
Yes, you are right. PNGRB has very recently notified as regards the tariff is concerned. Now there, they have classified 3 types of pipelines, which were in the prebidding period during the bid and pipeline, which are going to come in the new future. They have given the broad principles. We have to go through the final details of it. One thing I can only say that if there is an increase in the pipeline tariff, then ultimately till the time the same is not passed on in the pricing to the end consumer, that price doesn't get realized. So we'll have to see the entire gamut of activities. Currently, as regard HPCL is concerned, we have the second largest pipeline. As far the POL products, we have more than INR 5,000-odd crores of pipeline -- kilometers of pipeline. So right now for us, we take it as a cost to us to the extent we maximize the pipeline, our cost of placement of product comes down. So it becomes beneficial on that.
So sir, in the pipeline, gas pipeline, it is the integrated concept of the integrated tariff. All pipelines, tariffs are blended or single tariff for the customer. So is it also, your case also that you all pipeline will be clubbed or individually each pipeline, tariff will be decided?
If you see the notification, they have classified there. There are pipelines where it has been bid -- for first 10 years, that bid rate would be there. After that, they will be fixing up the tariff considering the NFA and the future -- considering the DCS methodology, they'll be fixing up the tariff. So let the final details come up. We'll let you know when we get the final details of it.
The next question is from the line of [ Vipul Kumar Anupchand Shah ] from Sumangal Investments.
Sir, is it possible to share our lube quantity in liters and what is the EBITDA we are making from that business?
The total lube which we have sold in this quarter is around 150 -- more than 150 TMT. Our yearly target is between 700 to 750 TMT in this year. And EBITDA and all, right now, we'll not be disclosing. But we have said that the yearly EBITDA is around INR 1,000 crores for us in the past.
INR 1,000 crores per annum.
Yes, yes.
And sir, this, means, 155 TMT, it should be equal to how many liters? Can you give any clarity regarding that?
X10,000 -- x10,000, sorry [indiscernible].
6-0 -- okay.
The next question is from the line of S. Ramesh from Nirmal Bang Equities.
So the first thought is, if you were to add back the LPG under-recovery, your EBITDA goes up to INR 4,400 crores. Given that refining margin is down, can you explain how you have achieved this sort of EBITDA, if you were to ignore the LPG under-recovery provision?
Just come again.
Sir, if you look at your reported EBITDA at INR 2,100 crores, which includes the hit of INR 2,300 crores for LPG under-recovery, right? So we add back to the EBITDA, your marketing EBITDA is about INR 3,600 crores, your refining is about INR 800 crores, INR 900 crores. So where have you achieved this growth in your EBITDA, you were to add back the LPG under-recovery?
See, we are getting higher EBITDA for, one is marketing. If you see the growth, we are growing at the rate of, say, 5% to 6% in marketing. Even our crude throughput has increased compared to last year. And consistently, past 2 years, the crude process is also going up. Now because of the reduction in GRMs this year, the marketing -- the refining contribution is less. Otherwise, the EBITDA used to be much more than what you have been referring to.
Yes. So the question is in marketing EBITDA, if you had to account for the reduction in refining -- where have you seen the growth in marketing EBITDA? That's what we're trying to understand.
I'm saying we have not shared the marketing EBITDA. Numbers, we have not shared. But that can be attributed to increase in our market sales, increase in sales in all the products in terms of MS, HSD, ATF, lubricants, LPG, except I think [indiscernible], all other products, we have grown substantially higher than other OMCs and almost in line with the industry, that's the private players. So that is 1 factor, which can be appreciated. But individual numbers, we have not talked about so far in terms of financial numbers.
Okay. Second part is if you look at the outlook for refining and crack spread. So is there any impact on diesel margin because of this movement of, say, high-sulfur fuel oil for the maritime demand? And how do you see that changing if the high-sulfur fuel oil usage in maritime demand goes up? How do you see that? And overall, what will be the drivers for petrol and diesel cracks in the coming quarters? You see fundamental demand for petrol and diesel going up? Or would they still be constrained by the excess supply, particularly the slowdown in China?
Yes. See, right now, the reason being attributed for the softness is the slowdown in China and all. But truth is that for the same reason it was going up. So these things will keep on changing, but the fact remains the Indian demand is quite robust. The Indian demand for both HSD and MS is increasing. And like if you see, the MS growth is more than around 7%. The HSD is also 1.5% to 2%, which is continuously happening. And that is the reason why domestic new capacities are also coming up. So I see that with the current set of demand, which is the way it is increasing, the outlook for India is going to be positive. The GRMs are going to be in the range of $5 to $8 a barrel. And that is what the various rating -- the agencies also are saying the forecast and is also that the GRMs and all, would remain firm as regard to the balance period of this year.
So with respect to the HSFO demand variation and relation to diesel. Our diesel demand does not -- is not dependent on HSFO demand or any furnace oil demand. So that is irrespective of it. And whatever fuel oil demand is there, that is met from actual fuel oil production without affecting any of the diesel production.
Okay. So now if you look at the impact on consolidated earnings, say, for FY '26 and then '27, in your ramp-up phase, should we expect any loss at EBITDA or at EBIT level as you commission, yes, it's on a consolidated basis from FY '26 first quarter? And when do you see the HPCL LNG and the JV accounting of Rajasthan Refinery, actually adding to your EBITDA and EBIT -- over, say, FY '26?
Yes. As we have explained that as far as Chhara is concerned, we are going to commission that in this calendar year, by this calendar year-end. So maybe as we go forward, once it stabilizes, we would start seeing those results. As far as Barmer is concerned, which is a joint venture between us and Rajasthan government, as I mentioned, that by this financial year-end, we would be commissioning our refining portion. And once that is commissioned, we have also -- earlier calls, we had said that in terms of our crude procurement for the year, we have also taken that last quarter, what kind of crude would be required. So that we have factored in already. And as we go forward, we will start seeing this same post-stabilization. Now refinery, you would appreciate that once it is fully stabilized and commissioned, we will start seeing the results immediately because the product requirement which is there -- the demand, which is there, it is quite robust. So it will happen unlike in other products, this would happen straight away from the days even.
Okay. In your HMEL refinery, in the first quarter, has petrochemicals contributed anything to the profit? Or is there still [indiscernible] petrochemical margins are...
No, it has contributed positively.
It has contributed positively.
The next question is from the line of Vishnu Kumar from Avendus Spark.
Sir, I'm going to the previous caller's question again on the marketing side. As analysts, we all compute the numbers quarter-on-quarter, and we take your thoughts that you said on the volume growth. But when we look at, we add the INR 2,400 crores of LPG plus INR 250 crores of inventory loss and also considering the fact that this quarter, the diesel margin is probably slightly lower than last quarter, there seems to be a large delta quarter-on-quarter. So is it because of any particular other products have done well? Or should we expect some part of this to be reversed in the next quarter? Because the number seems to be quarter-on-quarter as it seems to be a little large?
No, there is no extraneous entry which has gone into this quarter in that way. That -- what we can do is we can in the sideline discuss the numbers what you are factored and what is it there. There appears to be some kind of clarification which is required. So what I would request is, let's say, you can come across, we can share this because as of now, we have not taken any other extraneous factor into account. Probably we'll be able to explain to you in greater detail once we sit across and -- so you're most welcome or -- you or anybody else also is most welcome, we can sit across and sort this out. We can explain to you, transparently share this with you. Okay?
We'll reach out later on this. Sir, and secondly, on the pipeline EBITDA, if you could probably help us understand, what would that quantum be, in say, the marketing or roughly if you had the transfer pricing cost, if there is some internal number that we have kept and if you could help us understand that?
No. See, we had -- I had already stated earlier that for us, HPCL -- we are -- the pipeline is a mode -- a carrier for us for shipping the products. So we view it more from a cost perspective as to what is it or what cost benefits it can bring in that system. We are not doing any transfer pricing right now for the pipeline in our system.
Got it. Sir, and you're mentioning that...
[indiscernible] because most of these pipelines are utilized for transporting our products. So we see this as an alternate and effective method of our primary distribution, logistics and things like that. So therefore, this is taken as a cost center.
Understood, sir. But when you mentioned in the previous caller's questions on the PNGRB increase, if any, would it be allowed as a pass-through in our RTP finally? I mean, in the retail price, can you pass it on, let's say, if you see some increase? Or that is a separate point and you cannot increase it, if it changes...
Yes [indiscernible] as we go forward because those would require some other factors, considerations. So right now, that is work in progress. So let more details emerge, then we will be able to answer and address that. Okay.
Understood. And just on the final question on the Bathinda refinery. The petrochemical number is included in the GRM or is it a separate number?
It's included.
It is Included. And what will be the current debt [indiscernible]?
It's around INR 34,000 crores , INR 35,000 crores.
The next question is from the line of Sabri Hazarika from Emkay Global.
So I have 3 questions. First question is this INR 40,000 crores EBITDA target that you have by FY '28. So is it stand-alone or consolidated?
Consolidated.
Okay. It's consolidated. And currently, if I [indiscernible] the LPG under-recovery and the inventory losses, so we are at a sort of like INR 18,000 crores, INR 20,000 crores kind of run rate. So is it the -- I mean, everything remaining constant, is it the kind of run rate which is like is sustainable? And of course, like on top of that, probably some more numbers will come from the Vizag stabilization. Is it the right way to look into it, if I want to...
The Vizag stabilization is going to add a lot of value to us. One is in terms of increased throughput; one is us reaching the 15 million tonnes; then we can further increase the capacity over there in the near future through a small CapEx plan -- we can increase the capacity by almost 2 million metric tonnes over there. Then the Rajasthan Refinery products, in September would come out, that would be marketed by us. [indiscernible] would start contributing. And even the other JVs where CGD network and other things have we put up that there, again, where we have already spent -- invested more than INR 2,000 crores. And in the next 2, 3 years, those will also get matured and start contributing. So on a consolidated level, the entire -- all these things are likely to take the EBITDA to almost -- more than INR 40,000 crores.
And your CapEx will be something like INR 14,000 crores, INR 15,000 crores, right, for the next 3, 4 years?
Yes, yes. And as we had explained earlier, I mean, this is for the benefit of all of us that we had said achieve that target and to achieve that vision which we have got, we have got all the fundamentals and building blocks in place, both in terms of quality of our assets, that is in our refinery, in terms of our bottom upgradation, in terms of capacity for our assets, in terms of Mumbai refinery reaching 10 million tonnes, Vizag reaching 15-plus million tonnes, our HRRL 9 million tonnes. So we will have substantial improvement in terms of capacity, in terms of quality of our assets, and the other advantages in terms of our gas terminal, in terms of petrochemical play, in terms of our biofuels play, and also in terms of our renewables and our biofuels and biogas. So all these are fundamental building blocks which are already in pace. Substantial progress has been made. So therefore, whatever we have stated and we have been maintaining, we are very confident that we'll be able to achieve this.
Right. Sir, just a small follow-up. So if I assume that the stand-alone numbers basically, let's assume that around INR 20,000 crores EBITDA you are making, INR 14,000 crore, INR 15,000 crores like CapEx is there. So how do you think the debt will move? I mean if I include the tax and all, do you think, I mean, in the current level of, say, around INR 50,000 cores INR 51,000 crores debt, there will be deleveraging or will stay at this level only and our ratios will basically improve rather than debt, absolute debt going down?
Yes. One is the leveraging part, the debt equity will be improving. Most of the investment which are going to happen, would happen out of internal generation. So there's no plan to add on to the debt at the levels which we are.
Probably it will remain at this level, but not add any more?
It will improve.
Not the ratio will improve. And last 2 small questions. Firstly, green hydrogen, how much cost are you getting right now for producing this? Or is it too early to say right now?
Right now, what we have done is the pilot project, our first project -- so this depends on the power, what we get -- green power what we get from the grid. So it's about twice than what we are actually doing through grid. And as the power cost comes down, then it will further come down.
Right. And last small conceptual question, if my pipeline tariffs were to be set using DCF for newer pipeline, so that would be higher than the older pipeline. This like 17% hike, which PNGRB must have calculated. So the DCF will be always more than 17%, right? Or since it does like it involves substantial CapEx?
As we have mentioned, these details have to emerge because it will explain that there are some pipelines which were done -- PNGRB period. There are some captive pipelines. There are some pipelines which are in the third category, which will come. So all that has to be consolidated. And I'm afraid right now, we are not able to give you a very specific this thing because the picture is not clear, right?
Conceptually, a newer pipeline will have a higher rate than older pipeline. Is that right?
Going by the notification or the English which is stated there, what you are saying is right, but that primarily applies to a pipeline which is totally on an open access. But in our case, the terminal is already stated. We -- our pipeline to manage from our refineries and these have been set up primarily to evacuate the refineries. So now for us, these are integral part of the existing company. If we set up a new company and put the pipelines in that and then do -- then straight away, you can apply the principle that anyone whoever is the user of this facility would be paying me the charge. But if you see most of the cases, most of -- all the OMCs have the pipeline emanating from their refineries. So they will only be the user. So that -- it doesn't make much difference to us in terms of calculating the revised tariffs because these are mainly for evacuating the product or placing the product from our refineries to the secondary pricing refineries.
Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Varatharajan for closing comments.
Thank you, Sejal. Sir, if you have any closing comments, please go ahead.
Well, No -- thanks a lot. And as we have indicated, if there are some more specific details which are required, so any one of you is most welcome to visit and connect with Mr. Vinod. We'll be very happy to provide the details. Thank you very much.
Thank you, sir. I wish to thank all the participants for taking time out to participate in the call. And I would like to thank the management, both for giving us the opportunity to hold the call as well as sharing all the details in a positive manner with all the investors. And I will specifically thank Mr. Joshi for the initiatives we have taken for investor outreach and especially given the fact that he is going to retire next month. Thanks a lot, sir, for all the support and wish you all the best.
Thank you very much. I really appreciate that. Thank you very much.
Thank you. Thank you.
On behalf of Antique Stockbroking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.