Bharat Petroleum Q3 Results Review - Outlook Intact Amid Stable Performance: Motilal Oswal

Motilal Oswal Report

Bharat Petroleum Corporation Ltd.’s reported gross refining margin came in 14% above our estimate at $13.4/barrel of oil in Q3 FY24, while implied marketing margin came in 9% above our estimate at Rs 3.5/litre. Despite higher-than-estimated margins, Ebitda was in line with our estimate due to higher employee benefit expenses.

Refining throughput stood at 9.9 million metric tonne, which was more than 100% of nameplate capacity, despite a planned shutdown at Mumbai refinery.

During the quarter, high Sulphur crude accounted for 83% of processed crude mix, while Russian crude made up 40% of the mix.

Singapore GRM has rebounded to $7.2/bbl in Q4 FY24 so far from $5.5/barrel of oil in Q3 FY24, which may improve the refining performance in Q4. Kochi and Bina refineries are planned to be shut for 15 days in FY25; however, the exact dates are still being worked out.

Marketing sales volume (excluding exports) stood at 12.9 mmt in Q3 FY24 (versus 12.2 mmt in Q2 FY24). During April-December 2023, BPCL’s market share stood at 29.62%/29.71% in petrol/diesel.

At 1.1 times FY26 price/book value, we see limited downside from the current level. However, with minimal volume growth in next two years and volatility in earnings from the marketing division, we maintain our Neutral rating with a target price of Rs 475, valuing the stock at 1.2 times Dec-25E book value.

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