BPCL Q3 Preview: Net Profit Could Fall Over 60% On Weaker Margins

Bharat Petroleum Corp. might post weak third-quarter earnings due to a possible decline in refining and marketing margins, accompanied by inventory loss due to a drop in crude prices during the quarter.

Net profit of the public sector undertaking may fall 61.5% quarter-on-quarter to Rs 3,270 crore in the October–December period, according to Bloomberg consensus estimates. Ebitda margin may decline 780 basis points.

• Revenue may rise 2.2% to Rs 1.05 lakh crore.

• Ebitda may fall 61.6% to Rs 4,953.59 crore.

• Margin may fall to 4.7% vs 12.5%.

• Net profit may fall 61.5% to Rs 3,270 crore.

Jefferies expects a sharp 62% quarter-on-quarter decline in the oil marketer's third quarter Ebitda. Net profit is also estimated to fall 72% QoQ, during the period, as the refining and marketing segment of the company turned weaker, the brokerage said.

Bharat Petroleum's refining segment could be weaker in Q3, due to the sharp fall in benchmark Singapore gross refining margins to $5.5 per barrel, Jefferies said. The OMC's marketing segment profitability could also be weaker due to fall in diesel marketing margins. Marketing margins on diesel fell to a negative $ 1.4 per liter during the quarter, the brokerage noted.

Kotak Securities Ltd. also expects a 55% and 65% fall in Ebitda and net profit, respectively, mainly on the back of weaker middle distillate cracks and inventory loss, due to the 16% fall in brent crude prices during the quarter.

It estimates Bharat Petroleum's gross marketing margin to stand at $9 per barrel, compared to $18.5 per barrel margin reported in Q2. Kotak also expects an inventory loss of Rs 2,500 crore, with a $2.5 per barrel loss in the refining segment and a $1.3 per barrel loss in the marketing segment.