Equity Research Report – Q4FY25 Review
PL Capital Research | May 2025
- Hindustan Petroleum Corporation Ltd (HPCL IN)
Rating: SELL | CMP: ₹397 | Target Price: ₹319
Valuation Basis: 1.0x FY27E P/BV
- Investment Summary:
HPCL posted a strong Q4FY25 driven by better-than-expected GRMs and stable marketing margins. However, FY25 performance was significantly marred by weaker full-year GRMs, LPG under-recoveries, and rising net debt. Given normalized margin expectations for FY26-27 and persistent capital intensity, we retain our SELL rating with a TP of ₹319.
Key Q4FY25 Highlights:
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EBITDA: ₹58bn (+20.8% YoY | PLe: ₹35.6bn)
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PAT: ₹33.5bn (+18% YoY | PLe: ₹10.8bn)
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GRM: USD8.5/bbl (Incl. USD1.4/bbl inventory gain)
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GMM: ₹4.6/lit (vs ₹4.8/lit in Q4FY24)
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LPG Under-Recovery (FY25): ₹109bn (₹33bn in Q4)
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FY25 PAT: ₹67bn (vs ₹160bn YoY); Net Debt: ₹662bn
Outlook & Commentary:
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Expect FY26/27 GRMs at USD6/bbl vs FY25 average of USD5.7
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Petrochem integration (Barmer) could lift margins from Jan’26
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Ongoing capex intensity (₹145bn in FY25; ₹130–140bn in FY26) limits FCF
Valuation & Recommendation:
The stock trades at 1.3x FY27E P/BV. With moderated earnings outlook and sustained capital needs, risk-reward remains unfavorable. Maintain SELL with a TP of ₹319.
- Safari Industries (India) Ltd (SII IN)
Rating: BUY | CMP: ₹1,960 | Target Price: ₹2,437
Valuation Basis: 45x FY27E EPS
Investment Summary:
Safari delivered strong operational performance in Q4FY25 despite top-line pressures. Margin tailwinds from falling RM costs, better product mix, and improving capacity utilization at Jaipur are positive structural trends. We expect 19% revenue and 36% PAT CAGR over FY25-27E. Maintain BUY with a TP of ₹2,437.
Key Q4FY25 Highlights:
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Revenue: ₹4,211mn (+15.2% YoY)
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EBITDA Margin: 14.5% (vs PLe: 12.8%)
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PAT: ₹376mn (-13% YoY; PLe: ₹336mn)
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GM: 49.2% (vs ~mid-40s in previous 3 quarters)
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Volume Growth: 22% YoY
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Jaipur Plant Utilization: 20% avg, 30% exit run-rate
Strategic Updates:
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Premium brands (Urban Jungle & Safari Select) at 3% share, expected to double
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E-commerce ~40% of channel mix
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High inventory and receivables due to ramp-up and credit in online sales
Valuation & Recommendation:
Margins are stabilizing, premium mix is rising, and capex benefits will support competitiveness. At current levels, risk-reward remains favorable. Maintain BUY with TP of ₹2,437.
- Kajaria Ceramics Ltd (KJC IN)
Rating: ACCUMULATE | CMP: ₹800 | Target Price: ₹878
Valuation Basis: 30x FY27E EPS
Investment Summary:
KJC’s Q4FY25 was subdued, marked by muted volume growth and sharp EBITDA margin contraction. The exit from plywood, scale-back of UK ops, and cautious FY26 guidance reflect ongoing demand weakness. Management aims to regain margin and volume momentum via product mix improvement and cost rationalization. We downgrade to ACCUMULATE with revised TP of ₹878.
Key Q4FY25 Highlights:
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Revenue: ₹12.2bn (+1.1% YoY; PLe: ₹12.5bn)
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Tiles Vol Growth: +1.8% YoY
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EBITDA Margin: 11.3% (down ~300bps YoY; PLe: 13.4%)
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PAT: ₹663mn (-37.3% YoY; PLe: ₹944mn)
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Gross Margin: 55.8% (+170bps YoY)
Strategic Commentary:
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Plywood biz discontinued due to lack of scale and margin
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FY26 exports to revive (from Rs160bn to Rs200bn) with lower freight
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Expanding premium product portfolio and dealer network
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FY25 capex of ₹2,000mn planned, including ₹750mn for corporate HQ
Valuation & Recommendation:
KJC expects 9.2% revenue and 16.6% PAT CAGR over FY25-27E. While long-term potential remains intact, near-term margin headwinds and demand uncertainty warrant caution. Downgrade to ACCUMULATE with TP of ₹878.
