Bharat Petroleum Corporation (BPCL IN) Q3FY25 Result Update

Swarnendu Bhushan

Bharat Petroleum Corporation (BPCL) reported lower-than-expected Q3FY25 results with EBITDA of Rs75.8bn (up 68% QoQ, PLe: Rs83bn, BBGe: Rs80bn). PAT came in at Rs46.5bn (up 94% QoQ, PLe: Rs48.6bn, BBGe: Rs52.6bn). GRM stood at US$5.6/bbl. GMM as per our calculation came in at Rs7.4/ltr. The company declared an interim dividend of Rs5/share. Average Singapore GRM in Q4-TD is ~US$3/bbl, while GMM on petrol/diesel has moderated to Rs10.9/6.6/ltr. Thus, near-term weakness is likely to persist on both the refining and marketing front. We expect GRM to bounce back to the long-term average of US$5-7/bbl in FY26/27 and build in a GRM of US$5.7/6/6/bbl for FY25/26/27E. On the marketing front, we estimate a GMM of Rs5.2/4.1/4.1/ltr for FY25/26/27E. The stock is currently trading at 1.3/1.2x of FY26/27 P/BV. We maintain HOLD rating with a TP of Rs286 based on 1.3x FY27 P/BV.

  • Operating performance improves QoQ: Operating profit at Rs75.8bn grew 68% QoQ on account of sequentially better GRM and GMM. PAT came in at Rs46.5bn, up 93.9% QoQ. On a YoY basis, EBITDA/PAT increased by 22%/37%.
  • Refining margins at US$5.6/bbl: Refining throughput stood at 9.5mmt, down 7.2% QoQ. Reported GRM came in at US$5.6/bbl (PLe: US$7.5/bbl). GRM was up 27% QoQ. On a YoY basis, GRM fell 58%. Average Singapore GRM for Q4-TD has softened to ~US$3/bbl amid decline in product cracks. We believe GRM will revert to its long-term average of US$5-7/bbl in FY26/27. Going ahead, we anticipate a GRM of US$5.7/6/6/bbl for FY25/26/27E.
  • GMM improves sequentially: Marketing sales for Q3 stood at 13.4mmt, up 8.4% QoQ. Implied GMM came in at Rs7.4/ltr (PLe: Rs6/ltr), up 28.2% QoQ. Marketing inventory loss was Rs7.2bn. Further, BPCL faced an under-recovery of Rs31bn on the LPG front. In the current quarter, marketing margins on petrol/diesel are averaging at Rs10.9/6.6/ltr. Accordingly, we build in a GMM of Rs5.2/4.1/4.1/ltr for FY25/26/27E.
  • Concall Highlights: 1) Physical progress on Bina (3mmtpa expansion) stands at 7.5%, which is expected to be completed by May’28. Bulk of the capex will be incurred in FY28. Capex is estimated at Rs490bn. BPCL secured a loan facility of Rs318bn from a consortium of 6 banks. 2) BPCL processed 31% of Russian oil in Q3. It has sourced cargoes for Jan and Feb, but there aren’t sufficient cargoes for Mar post US sanctions. 3) The Board has approved Rs61bn for pre-project activities, land acquisition, feasibility studies, and environmental assessment for a greenfield refinery cum petchem facility at Andhra Pradesh. 4) Capex incurred in 9M stands at Rs119bn. 5) SA gross borrowing stood at Rs196bn as of 31st Dec’24. Current investments including oil bonds, of ~Rs161bn. Consol gross borrowing stands at Rs465bn.

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