The share price of Hindustan Petroleum Corporation Ltd (HPCL) rebounded from day’s low to trade over 4 percent higher on Wednesday after the company reported its earnings for the fourth quarter of fiscal 2020.

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The stock fell in the early trade to hit an intraday low of Rs 204.90 per share on the BSE. However, it recovered and was trading 3.43 percent higher at Rs 217.10 at 11:10 hrs.

HPCL on Tuesday reported a steep 99 percent drop in its net profit to Rs 27 crore in Q4FY20 as refining margins plunged and inventory losses mounted because of a sharp fall in international oil prices. The company had posted a net profit of Rs 2,970 crore in the corresponding period a year ago.

The company suffered an inventory loss of Rs 4,113 crore in the January-March 2020 quarter as compared with an inventory gain of Rs 1,224 crore in the same period a year back.

Not accounting for inventory losses, the GRM was $9.37 per barrel in Q4 of 2019-20 fiscal as compared to $0.85 a barrel in the same period a year back.

“Headline GRM’s for the quarter stood at negative $1.23 per barrel though GRM’s adjusted for inventory losses surprised positively at $9.37 per barrel as compared to $0.85 per barrel in Q4FY19. While the Q4FY20 numbers have come in ahead of street estimates we believe that the Q1FY21 would be keenly watched by the markets given that demand would be adversely impacted for the better part of the quarter as compared to just about a week in Q4FY20,” said Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd.

Domestic sales volumes were at 9.25 million tonnes in the fourth quarter, against 10.03 million tonnes in the corresponding quarter of the previous financial year.

Global brokerage Nomura maintained a 'Neutral' rating with a target price at Rs 185 per share. The brokerage believes that the company's refining margins were better on higher throughput and stronger core margins.

The brokerage feels that the Q1FY21 also looks to be weak for the company with marketing a bigger worry. It noted that the company’s net debt increased sharply to Rs 43,000 crore from Rs 28,600 crore at Q3-end.

Credit Suisse noted that HPCL’s marketing segment performance was in-line with its peer Bharat Petroleum Corporation Ltd. HPCL’s marketing margin improved QoQ due to a high auto fuel margin.

The brokerage believes that the pressure on the marketing margin is still high and the company needs a price hike of another Rs 3.50-4 per liter.

Credit Suisse maintained a 'Neutral' call with a target price of Rs 180 per share.