Company Update : BPCL Ltd By Motilal Oswal Financial Services Ltd
Performance largely in line led by strong marketing margins
* BPCL’s reported 3QFY25 financial performance was largely in line with our expectations, as weaker-than-expected refining performance was offset by higher-than-expected marketing margins. EBITDA was 6% below our estimate, marred by forex and marketing inventory losses (total INR10b). The surge in opex in 3QFY25 was likely attributable to variable pay-related expenses, which typically occur for OMCs in 3Q every year. LPG underrecoveries were ~50% higher on a quarterly basis vs. 1HFY25 (~INR20b/INR21b/INR31b in 1Q/2Q/3Q). Overall, refining GRM has remained soft in Jan’25, and though MS/HSD marketing margins are down 16%/23% QoQ in 4QFY25 so far, OMCs continue to generate healthy marketing margins.
* BPCL’s reported GRM stood at USD5.6/bbl (vs. our est. of USD6.4/bbl and USD4.4/bbl in 2QFY25).
* Refining throughput was in line with our estimate at 9.5mmt (-3% YoY).
* Marketing volumes, excluding exports, were in line with our estimate at 13.4mmt (+4% YoY).
* Marketing margin (including inv.) was 6% above our estimate at INR7.4/lit (vs. INR5.8/lit in 2QFY25).
* EBITDA stood at INR75.8b (our est. INR80.8b), with marketing inventory loss/forex loss amounting to INR7.2b/INR2.7b in 3QFY25.
* LPG under-recovery amounted to INR31.1b, which we believe could be reversed in due course as LPG remains a controlled product.
* Reported PAT was in line with our estimate at INR46.5b, while other income came in INR4.7b above our estimate.
* In 9MFY25, net sales were flat YoY at INR3.3t, while EBITDA/PAT declined 49%/55% to INR178b/INR101b.
* As of Dec’24, BPCL’s debt stood at INR196.2b vs. INR215.3b/INR152b as of Sep’24/Jun’24.
* As of Dec’24, BPCL had a cumulative negative net buffer of INR72.3b due to the under-recovery on LPG cylinders (INR41.2b as of Sep’24).
* The board declared an interim dividend of INR5/share (FV: INR10/share).
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