InvestorQ : Why did HPCL report such a steep fall in net profits for the Mar-20 quarter?
diksha shah made post

Why did HPCL report such a steep fall in net profits for the Mar-20 quarter?

Answer
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rhea Babu answered.
3 months ago


Most of the oil market companies or OMCs have been under pressure as lower oil prices have meant lower inventory valuations and HPCL has been no exception. HPCL, now majority owned by ONCG, reported a steep fall of 99% in net profits for the Mar-20 quarter at Rs.27 crore. As stated earlier, the sharp fall in profits can be largely attributed to a spike in provisions for inventory losses due to the weakness in oil prices as of the end of March. OMCs and refiners value the closing value of their crude and oil stocks at market value each quarter. HPCL revenues fell by just 2% in the March quarter. However, it must be remembered that March month saw only a partial impact of lockdown. However, the real impact of the pandemic would be visible in the June and September quarters. So the next two quarters could mean more pressure on HPCL numbers on the top line.