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Informist, Thursday, Jul 18, 2024

 

By Sayantan Sarkar

 

NEW DELHI – Nifty 50 heavyweight, Bharat Petroleum Corp Ltd's net profit is likely to have fallen in Apr-Jun due to a decline in refining and marketing margins and a rise in crude oil prices, analysts said. The company's bottomline is expected to decline by 71% on-year to 30.15 bln rupees in the June quarter, according to an average of estimates from 10 brokerages. The estimates of net profit range from 22.41 bln rupees to 40.35 bln rupees.

 

The state-owned refiner's revenue is expected to have risen 2% on-year to 1.15 trln rupees during Apr-Jun. The highest and lowest projections were at 1.27 trln rupees and 1.01 trln rupees, respectively. Sequentially, net profit is seen down 29% and revenue down by 1%.

Cash profits from operations or earnings before interest, taxes, depreciation and amortisation were seen at 58.80 bln rupees in Apr-Jun, according to the average of estimates of nine brokerages. The company is scheduled to announce its Apr-Jun results on Friday. 

 

The refiner's EBITDA for the June quarter is expected to have fallen as much as 54% on year, led by both weak refining and marketing margins, Nuvama Wealth Management said in a report. The brokerage also said that benchmark Singapore gross refining margins fell 16% on-year due to a fall in global product cracks. Gross refining margin is the difference between the price of crude oil and the total value of petroleum products produced by a refinery on a per-barrel basis. It is a key indicator of a refinery's efficiency and profitability.

 

According to Nirmal Bang Institutional Equities, the gross refining margin of Bharat Petroleum during the June quarter is seen at $9.4 per barrel, down from $12.6 per bbl in the same quarter last year. Brent crude oil prices on the Intercontinental Exchange averaged $85 per bbl in Apr-Jun compared with $77.5 a bbl in the year-ago period. Higher oil prices tend to eat into the profits of downstream oil companies as they import crude oil to refine and produce petroleum products.

 

Brent crude oil prices rose in the quarter ended June as the Organization of the Petroleum Exporting Countries and allies extended their voluntary production cuts till the end of September. Rising geopolitical tensions in West Asia also contributed to a rise in prices as supply from the region remains under considerable threat. 

 

"We expect refining margins for OMCs (oil marketing companies) to decline sharply on a sequential basis in Apr-Jun underpinned by the significant decline in spreads for transportation fuel — diesel, petrol and jet fuel/kerosene," Nomura said in a report. It also expects the state-owned refiner's gross refining margin to decline to $6.3 per bbl in the June quarter from $12.5 per bbl in the previous quarter. 

 

Kotak Institutional Equities said a sharp quarter-on-quarter decline in key product cracks and lower discounts on Russian crude oil imports have impacted the gross refining margins of oil companies in India during the June quarter. "Further, with the full impact of 2 rupees per ltr price cut in March and higher Brent prices, marketing margins on auto fuels were also weaker qoq (quarter-on-quarter)," it said. On Mar 14, the state-owned oil marketing companies cut prices of petrol and diesel by 2 rupees per ltr. 

 

Bharat Petroleum Corp's crude oil refining throughput is expected to remain flat on-year at 10.4 mln tn during Apr-Jun, according to Nirmal Bang. Nuvama Wealth Management also expects refining throughput to remain steady both on a year-on-year basis and sequentially. 

 

Nuvama said it expects diesel margin for the June quarter at 4 rupees per ltr, down 60% from last year. "We also anticipate (a) 4% YoY rise in domestic retail sales," the brokerage said.   

 

Motilal Oswal sees marketing sales volumes of the company, excluding exports, to be at 13.3 mln tn in Apr-Jun, up 4% on a year-on-year basis. The brokerage also said that key monitorables would be updates on Bina refinery expansion and the construction of new petrochemical plants.

 

Since its Jan-Mar earnings, shares of BPCL have gained 5%. Today, the shares closed 0.7% higher at 318.15 rupees on the National Stock Exchange.  

 

Following are the Apr-Jun earnings estimates of the company based on reports from 10 brokerage houses:

 

Brokerage	Net sales (in mln rupees)	Net profit (in mln rupees)	EBITDA (in mln rupees)
Anand Rathi	1,265,848	30,962	-
Elara Securities (India)	1,137,982	34,915	66,754
Emkay Global Financial Services	1,181,344	22,408	47,474
Kotak Institutional Securities	1,139,979	26,036	52,530
Motilal Oswal Financial Services	1,015,400	33,000	59,600
Nirmal Bang Equities Pvt Ltd	1,105,186	30,430	64,298
Nomura Equity Research	1,140,200	25,900	53,600
Nuvama Wealth Management	1,258,061	40,349	72,561
Prabhudas Lilladher Pvt Ltd	1,006,100	33,100	61,700
YES Securities	1,270,812	24,421	50,713
Average	1,152,091	30,152	58,803

 

End

US$1 = 83.65 rupees

 

Edited by Saji George Titus

 

 

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