HPCL, BPCL Q2 Preview: Higher Marketing Margins Likely To Support Earnings
Here's how HPCL and BPCL may have performed in the quarter ended September 2024, as per Bloomberg estimates.
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Hindustan Petroleum Corp. and Bharat Petroleum Corp. will announce their second-quarter results for fiscal 2025 on Oct. 25.
While the refining segment of the oil marketing is expected to be weak, lower oil prices are set to support the marketing segment's performance.
Here's how HPCL and BPCL may have performed in the quarter ended September 2024, as per Bloomberg estimates:
HPCL Q2 Results: Bloomberg Estimates (Standalone, QoQ)
Revenues may fall 12.7% to Rs 1.05 lakh crore.
Ebitda may jump 100.33% to Rs 4,222.32 crore.
Margins may expand to 4% versus 1.7%.
Net profit may jump 439.02% to Rs 1,917.83 crore.
BPCL Q2 Results: Bloomberg Estimates (Standalone, QoQ)
Revenues may fall 3.3% to Rs 1.09 lakh crore.
Ebitda may rise 10% to Rs 6,248.8 crore.
Margins may expand to 5.7% versus 5%.
Net profit may rise 22.3% to Rs 3,687.2 crore.
Revenues
Revenues of both HPCL and BPCL are expected to fall in the second quarter on a sequential basis, according to Bloomberg. This is due to weak demand seen in the quarter, Nuvama said. Domestic retail sales of the oil marketing companies may rise 4% on an annual basis but fall around 7% sequentially due to the seasonal impact of the monsoon season, it said.
A Weak Refining Segment
Singapore gross refining margins fell 62% year-on-year during the July-September period due to weak global product cracks. This is expected to impact the oil marketing companies. Nuvama expects Bharat Petroleum and Hindustan Petroleum to have gross refining margins of $7 per barrel and $5.5 per barrel, respectively. This compares to the $13-18 per barrel refining margin seen a year ago. Prabhudas Lilladher expects the gross refining margins to be in the range of $2–$6 per barrel in the second quarter.
Strong Marketing Performance
Oil prices witnessed a strong correction during the quarter, benefiting the oil marketing companies.
As per Emkay, the average marketing margins on petrol and diesel in the second quarter were in the range of Rs 8-10 per litre, compared to Rs 4-5 per litre. This is due to the supernormal marketing margins in the range of Rs 13-15 per litre seen in September 2024. As per Prabhudas Lilladher, marketing margins on petrol and diesel could average at Rs 9.8 and Rs 6.3 per litre during the quarter.
As per Motilal Oswal, the higher marketing margins expected could drive up the standalone Ebitda for Hindustan Petroleum and Bharat Petroleum by 125% and 38%, respectively, on a quarter-on-quarter basis.
