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Informist, Thursday, Jan. 16, 2025

 

By Sunil Raghu

 

AHMEDABAD – Stable refining and marketing margins and inventory gains could help state-owned Bharat Petroleum Corp. Ltd. clock a substantial on-year jump in its net profit for the December quarter. A fall in global crude oil prices could also help drive the company's net profit for the quarter higher.

 

The oil marketing company is expected to report a 45.1% on-year rise in its net profit for the December quarter at INR 49.3 billion, according to the average of the estimates of 13 brokerages. The estimates for net profit range from INR 34.1 billion by Nirmal Bang Equities Pvt Ltd. to INR 62.6 billion by Elara Securities (India) Pvt Ltd.

 

The state-owned refiner's revenue is expected to have fallen 9.6% on year to INR 1 trln during Oct-Dec. The lowest and highest projections for this metric were INR 954.7 billion by JM Financial Institutional Securities Pvt Ltd. and INR 1.24 trillion by Anand Rathi Share and Stock Brokers Ltd, respectively. 

 

Led by a fall in crude oil prices globally, the company's net profit is seen jumping 105.7% sequentially, though the revenue earned is likely to rise only 1.6%. For Jul-Sept, BPCL had clocked a net profit of INR 24 billion on revenue of INR 1.03 trillion. For the same quarter a year ago, the company had reported a net profit of INR 34 billion on revenue of INR 1.2 trillion.

Cash profits from operations or earnings before interest, tax, depreciation and amortisation, are seen at INR 82.5 billion for the December quarter, according to the average of the estimates of 11 brokerages. The company will announce its earnings for Oct-Dec on Wednesday. 

 

During the quarter, the price of Brent crude averaged $74/barrel, down $4.8/barrel from $78.8/barrel in the preceding quarter. The benchmark Singapore gross refining margins were $5/barrel, about $1.4/barrel higher than the previous quarter, with an uptick in key product cracks – gasoline flat and aviation turbine fuel up by $1.8/barrel and $1.5/barrel. The gross marketing margins for oil marketing companies improved sharply on a sequential basis due to the fall in crude oil prices.

 

"We expect companies to report improved gross refining margins on a stronger core and marginal inventory losses, while marketing adventitious gains to add strength. Overall oil marketing companies reported performance would be stronger on quarter, with a possible aid by the government on sharing liquefied petroleum gas subsidy burden," YES Securities (India) Ltd said in a report. "However, higher forex losses are also expected to affect the profitability."

 

For BPCL, YES Securities expects core or reported gross refining margin, or GRM, at $6.5/barrel on refining throughput of 9.1 million tonnes and marketing throughput of 13.7 million tonnes. It pegs the blended gross marketing margin at INR 8.2/litre and the integrated EBITDA margin at $6.5/bbl, up by $1.7/barrel on year and $1.9/barrel sequentially. JM Financial Institutional Securities Pvt Ltd, on its part, expects the crude throughput in the December quarter at 9 million tonnes and marketing sales volumes at 13.3 million tonnes, with a rise in auto fuel gross marketing margin to INR 9.5 per litre in Oct-Dec from INR 6.4 per litre in Jul-Sept. The brokerage had assumed the reported gross refining margin for BPCL in the December quarter at $7.4 per barrel compared to $4.4 per barrel in the September quarter.

 

Prabhudas Lilladher also expects BPCL to report strong operating results owing to better refining and marketing margins. The brokerage estimates a GRM of $7.5 per barrel and blended gross marketing margin of INR 6 per litre.

 

Meanwhile, Nuvama estimates the company's throughput to fall 10% on year due to a shutdown at its Mumbai and Kochi refineries in Oct-Nov. Despite this, the brokerage sees the fall in crude oil prices and the 4% on-year rise in domestic retail sales helping BPCL's retail margins rise sharply on year. It expects diesel retail margins to rise four times on year to INR 9 per litre and petrol margins to jump 41% on year to INR 13 per litre in the December quarter.

 

Nirmal Bang estimates BPCL's gross refining margin in Oct-Dec at $4.8 per barrel, compared to $13.4 per barrel in the year-ago quarter. This is likely to be due to an estimated forex loss of INR 2.1 billion, inventory loss of INR 22.7 billion, and LPG buffer deficit of INR 28.5 billion. Of this, there is potential for government compensation of INR 18 billion a quarter for BPCL.

 

Like Nuvama, Motilal Oswal also sees BPCL's throughput to fall 11% on quarter to 9.2 million tonnes, impacted by a planned shutdown of its Bina refinery for 15 days and of its Kochi refinery for up to 30 days during the quarter.

 

On Wednesday, shares of BPCL closed 1.2% lower at INR 267 on the National Stock Exchange.  

 

Following are the Oct-Dec earnings estimates for BPCL based on reports from 13 brokerage firms in descending order by the estimate of net profit:

 

Brokerage	Net sales (in INR million)	Net profit (in INR million)	EBITDA (in INR million)
Elara Securities (India)	995,642	62,561	96,872
ICICI Securities Ltd	960,900	60,800	97,200
YES Securities	1,131,717	60,228	94,002
Kotak Institutional Securities	987,909	52,939	85,288
Anand Rathi Share and Stock Brokers Ltd	1,236,311	49,100	--
Prabhudas Lilladher Pvt Ltd	999,400	48,600	83,000
Sharekhan Ltd	1,013,850	48,010	--
Motilal Oswal Financial Services	1,013,852	48,008	80,764
Emkay Global Financial Services	1,052,328	45,888	79,574
Dolat Capital Market Pvt Ltd	1,073,400	45,700	76,800
JM Financial Institutional Securities Pvt Ltd	954,724	45,430	77,440
Nuvama Wealth Management	1,108,855	39,701	70,068
Nirmal Bang Equities Pvt Ltd	1,044,536	34,058	66,083
Average	1,044,109.54	49,309.46	82,462.82

 

End

 

Edited by Avishek Dutta

 

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