Neutral Bharat Petroleum Corporation Ltd For Target Rs.360 By Motilal Oswal Financial Services
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* BPCL posted a 4QFY23 GRM of USD20.6/bbl, above our estimate of USD17.0/bbl; while implied marketing margin stood at INR2.9/lit (lower than our est. of INR4.5/lit).
* Refining throughput stood at 10.6mmt (v/s 9.4mmt in 3QFY23), while marketing sales volume (excluding exports) came in at 12.9mmt in 4QFY23 (v/s our est. of 12.1mmt; and 12.8mmt in 3QFY23).
* Singapore GRM has declined considerably to USD3.6/bbl in 1QFY24’td from USD8.2/bbl in 4QFY23, which may hurt refining performance in the upcoming quarter.
* BPCL’s marketing performance can improve further in the upcoming quarter as OMCs are estimated to be generating gross margins of INR9.1/ INR11.6 on petrol/diesel in 1QFY24’td due to decline in crude oil prices.
* There is no update on the divestment roadmap for BPCL now. The stock is trading at 1.3x FY24E P/BV, and we value it on 1.2x FY25E P/BV to arrive at our TP of INR360. Maintain Neutral.
Throughput in line, marketing volumes above estimate
* BPCL’s refining throughput was in line with our estimate at 10.6mmt (+5% YoY/ +13% QoQ).
* Reported GRM was above estimate at USD20.6/bbl in 4QFY23 (v/s our est. of USD17.0/bbl; and USD15.9/bbl in 3QFY23).
* Marketing volumes, excluding exports, were above our estimate at 12.9mmt (+9% YoY, +1% QoQ) during the quarter.
* Marketing margin (including inv.) stood at INR2.9/lit (v/s our est. of INR4.5/lit; and INR1.1/lit in 3QFY23).
* BPCL’s resultant EBITDA was 8% below our estimate at INR111.5b, but 47% above consensus estimate.
* Reported PAT was 11% below our estimate at INR64.8b – but 56% above consensus estimate – led by extraordinary expense of INR13.6b.
* Adjusted PAT was in line with our estimate at INR75.6b in 4QFY23.
* The Board declared a final dividend of INR4/share.
* For FY23, BPCL posted an EBITDA of INR126.5b (v/s EBITDA of INR193.6b in FY22), with reported PAT at INR18.7b (v/s PAT of INR113.6b in FY22).
* Marketing sales volume excluding exports rose 15% YoY to 48.9mmt, with marketing loss at INR1.4/lit (v/s marketing profit of INR5.3/lit in FY22).
* Refining throughput stood at 38.5mmt, with reported GRM at USD20.3/bbl (v/s USD9.5/bbl in FY22).
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