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Informist, Friday, Oct. 18, 2024

 

By Sunil Raghu

 

AHMEDABAD – A decline in the refining and marketing margins could make state-owned Bharat Petroleum Corp. Ltd. report a 55.45% on-year fall in its net profit to INR 37.87 billion in the September quarter, according to an average of estimates from 11 brokerages. The refiner's revenue is expected to have risen 3.83% on-year to INR 1.07 trillion. A year ago, the company's net profit was INR 85.01 billion on revenue of INR 1.03 trillion.

 

The estimates for net profit ranged from INR 24.77 billion by Antique Stock Broking Ltd. to INR 60.13 billion by Nirmal Bang Equities Pvt Ltd. The lowest and highest projections for revenue were INR 986.1 billion by Prabhudas Lilladher Pvt. Ltd. and INR 1.22 trillion by Anand Rathi Share and Stock Brokers Ltd, respectively.

Cash profits from operations, or earnings before interest, taxes, depreciation and amortisation, were seen at INR 65.75 billion in Jul-Sept, according to the average of estimates from 10 brokerages. The company is scheduled to announce its Jul-Sept results on Oct. 25. 

 

The price of Brent crude for the quarter averaged $78.8 per barrel, down $6.2 on-quarter and $7.1 on-year. The benchmark Singapore gross refining margins were at $3.6 per barrel, about $0.15 per barrel higher than the previous quarter. The gross marketing margins for oil marketing companies improved sharply in Jul-Sept on a sequential basis due to a fall in crude prices.

 

"We expect companies to report lower GRMs (gross refining margins) on weaker core and inventory losses while marketing adventitious losses (are likely) to add to the weakness, offsetting strong gross margins. Overall, oil marketing companies’ core performance would be stronger on quarter but, on a reported basis, weaker due to inventory losses,” YES Securities (India) Ltd. said in its report.

 

YES Securities expects the company's core or reported gross refining margin at $5.4 per barrel on a refining throughput of 10.2 million tonnes, and at $5 per barrel on a marketing throughput of 12.5 million tonnes. It expects blended gross marketing margin at INR 6.8 per litre and an integrated EBITDA margin at $4.3 per barrel, down by $3 per barrel on year but up $1.3 per barrel sequentially.

 

Prabhudas Lilladher expects BPCL to report weak operating results due to lower refining margins. The brokerage estimates a gross refining margin of $5.4 per barrel and a blended gross marketing margin of INR 5.5 per litre. Nuvama estimates BPCL's gross refining margin at $7 per barrel compared to $18.5 per barrel a year ago.

 

Motilal Oswal sees BPCL’s standalone earnings before interest, taxation, depreciation and amortisation rising 38% on quarter, driven by higher marketing margins that are seen up on quarter by 71% for petrol and 159% for diesel. Refining is expected to remain weak amid lower gross refining margins. BPCL’s volumes, too, are expected to fall 11% on quarter to 9 million tonnes, impacted by the planned shutdown of its Bina refinery in Madhya Pradesh for 15 days and the Kochi refinery for up to 30 days in Jul-Sept.

 

Analysts will be keen on any updates on the expansion of the Bina refinery and the construction of new petrochemical plants. BPCL has already announced plans to expand the Bina refinery at a cost of INR 500 billion, including expanding refinery capacity from 7.8 million tonnes per annum to 12 million tonnes per annum.

 

At 1036 IST, shares of the company traded 1.5% lower at INR 337.65 on the National Stock Exchange. Following are the Jul-Sept earnings estimates of the company based on reports from 11 brokerage houses:

 

Brokerage	Net sales (in INR million )	Net profit (in INR million )	EBITDA (in INR million )
Anand Rathi	1,220,046	41,725	-
Antique Stock Broking Ltd	1,074,412	24,775	50,334
Elara Securities (India)	1,067,449	31,309	57,763
Emkay Global Financial Services	1,009,269	37,925	66,068
Kotak Institutional Securities	1,064,360	42,521	70,867
Motilal Oswal Financial Services	1,071,130	46,538	78,237
Nirmal Bang Equities Pvt Ltd	990,901	60,130	95,961
Nomura Equity Research	1,079,800	40,700	68,900
Nuvama Wealth Management	1,102,711	31,104	57,659
Prabhudas Lilladher Pvt Ltd	986,100	32,600	61,700
YES Securities	1,096,428	27,229	50,011
Average	1,069,327.82	37,868.73	65,750.00

 

End

 

US$1 = INR 84.07
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Namrata Rao

 

 

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