Hindustan Oil Exploration Company Limited — Investor Meet, 25-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:**

Consolidated turnover decreased to ₹100 crore from ₹143 crore in the previous quarter, with a profit before tax dropping to ₹13 crore from ₹49 crore. Standalone revenue fell to ₹51.85 crore from ₹71.79 crore, mainly due to lower offtake at the Dirok field resulting from consumer plants being shut down. EBITDA decreased to ₹9.73 crore from ₹20.97 crore, while profit after tax fell to ₹1.11 crore from ₹11.39 crore. The challenges of low demand and fluctuations in crude prices contributed significantly to the poor performance.

**Future Outlook and Growth Drivers:**

Management anticipates improved sales volumes with the setup of the North-Eastern gas grid expected to increase demand significantly by FY 2025-26. There is optimism for enhanced production from the Dirok and B-80 fields. Additional drilling plans at the B-80 field aim to ramp up output to exceed 3,500 barrels per day by 2026-27, assuming stable demand conditions.

**Order Book and Operational Updates:**

The current operational focus includes workover and drilling plans in the North-Eastern and Cambay blocks. The Dirok field's infrastructure has been further developed, with a significant reduction in production from 22.65 mmscfd to 15.03 mmscfd due to demand fluctuations caused by external factors like floods.

**Analyst Q&A Insights (Detailed):**

- **Revenue and Profitability:** Questions focused on future revenue recovery and management confirmed expectations of improved uptake in Q3 and Q4 as demand revives.

- **Market Position and Competitive Landscape:** Analysts sought clarity on the B-15 offshore block bid, with management reinforcing the long-term returns expected from such investments.

- **Operational Challenges or Risks:** The management acknowledged challenges like weather impacts and variable consumer demands on production.

- **Capex and Capital Allocation:** Analysts discussed planned CAPEX, with management indicating continued investments around ₹250 crore for upcoming projects despite current lower revenues.

- **Strategic Priorities and Long-Term Vision:** The company emphasized a long-term strategy with the eventual goal of substantial production increase following grid connectivity enhancements.

**Strategic Focus Areas:**

The company is emphasizing innovation in operations and reduction of operational costs, particularly as demand conditions improve. There is also a focus on maintaining competitive advantage through strategic block acquisitions, such as the recent bid for the B-15 field.

**Investor Insight:**

Despite recent underperformance, the company's sustained focus on enhancing production capabilities and addressing operational inefficiencies suggests potential for recovery. The alignment of strategic investments with market opportunities could position the company favorably, leading to a potential ‘buy’ position considering the expected improvements in demand and production.