Company Update : BPCL Ltd By Motilal Oswal Financial Services Ltd
Beat driven by robust refining & marketing performance
* BPCL delivered a 46% beat on EBITDA, driven by higher-than-estimated GRM (USD9.2/bbl) as well as marketing margins (INR5.9/lit; INR 0.3/lit due to inventory gain). While BPCL booked an exceptional loss of INR17.7b due to the impairment of investment in BPRL, adj. PAT stood 71% above our est. at INR45.5b.
* In 4QFY25, LPG under-recovery amounted to INR32.2b (similar QoQ). The price of LPG cylinders has been hiked by INR50 for both subsidized and non-subsidized users w.e.f. 8th Apr’25. The government also increased excise duty on both Petrol (MS) and Diesel (HSD) by INR2/lit.
* Singapore GRM has weakened further in Apr’25TD, averaging USD3/bbl (vs. USD3.2/bbl in 4QFY25). We have a bearish stance on refining over FY26-1HFY28 amid strong ~2.5-3.0mb/d net refinery capacity additions globally during CY24-26 and demand worries due to rising trade tensions and possibilities of global macroeconomic slowdown. Even after excise duty hikes, current MS/HSD marketing margins continue to average above INR10/lit.
* BPCL currently trades at 1.5x 1-yr. fwd. P/B vs 10-yr. average of 1.8x. We have a Neutral rating on the stock.
* BPCL's reported GRM came in above our est. at ~USD9.2/bbl (our est. USD6.5/bbl).
* Refining throughput stood in line with our est. at 10.6mmt (+3% YoY).
* Marketing volumes, excluding exports, were also in line with our est. at 13.4mmt (-2% YoY).
* Marketing margin (including inv.) was 22% above our est. at INR5.9/lit.
* EBITDA stood at INR78.1b (our est. INR53.5b), with marketing inventory gain and forex loss amounting to INR5.2b/INR450m in 4QFY25, respectively.
* LPG under-recovery amounted to INR32.2b (similar QoQ).
* In 4Q, BPCL booked an exceptional loss of INR17.7b, on account of impairment of its investment in Bharat PetroResources (BPRL).
* While reported PAT stood 21% above our est. at INR32.1b, adj. PAT came in 71% above est. at INR45.5b.
* Other income came in above our estimates.
* In FY25, net sales were similar YoY at INR4.4t, while EBITDA/Adj. PAT declined 42%/48% to INR255b/INR146b.
* As of Mar’25, BPCL had a cumulative negative net buffer of INR104.5b due to the under-recovery on LPG cylinders (INR72.3b as of Dec’24).
* The Board recommended a final dividend of INR5/share (FV: INR10/share).
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
.jpg)
