Bharat Petroleum Corporation Ltd. share price target

BPCL Q4FY18 result beats our expectation in all front and delivered strongest growth amongst its peer group. Revenue increased 14.4% 652 bn, EBITDA grew 68% to 37.2 bn and PAT rose 45% 26.7 bn. Crude throughput touched to highest-ever 7.9mmt led by higher throughput at Kochi which saw over 100% utilisation. Sales volume also grew 10% to 11.1mmt while core GRM declined to US$5.6/bbl in Q4FY18 vs US$5.9/bbl in Q4FY17 due to lower GRM from Kochi refinery which is still under stabilization mode. We expect higher GRM and volume from Kochi would offset negative impact of...

BPCL net sales rose 14% to Rs 65239.31 crore for the quarter ended March 2018 compared to corresponding previous year period. This included subsidy from the government of Rs 216.01 crore down 25% on a y-o-y basis. Excluding compensation from the government sales of the company rose 15% to Rs 65023.3 crore. OPM of the company rose 180 bps to 5.7%. %. As a result operating profits rose 68% to Rs 3721.56 crore. Cost of material consumed as a percentage to net sales (net of stock...

Our SOTP target is Rs 571 (5x Mar 20E EV/e for standalone refining, 8x EV/e for marketing, 9x for pipeline and Rs 206/sh from other investments). Maintain BUY. BPCLs 4QFY18 EBITDA came in at Rs 37.22bn, up 68.2% YoY. This has been attributed to a 30.4% jump in refining throughput to 7.85mnT, 9.9% increase in marketing volumes at 11mnT, and 23.9% increase in blended marketing margins to Rs 4.26/ltr. Refinery throughput was higher on account of Kochi refinery expansion during 2HFY18 and Mumbai refinery throughput was lower in 4QFY17 due to shutdown. PAT stood at Rs 26.74bn up 45.2% YoY.

ICICI Securities Ltd | Retail Equity Research Bharat Petroleum Corporation (BPCL) reported Q4FY18 results below our estimates on the refining margins front. Revenues increased 8.4% QoQ to | 76067 crore in line with our estimate The operational performance was below our estimates with reported GRMs at US$6.5/bbl vs. our estimates of US$7.5/bbl. Lower GRMs were mainly due to lower (core) operating GRMs at US$5.6/bbl. The quarter witnessed inventory gains of US$0.9/bbl. EBITDA at | 3721.6...

According to media reports, the government may ask state oil marketing companies to absorb a hike of up to | 1 per litre on petrol and diesel retail prices. Brent crude oil prices have witnessed an upward trajectory in the past two quarters and are currently at a four-year high of US$71/bbl. This has led to the escalation of petroleum product prices, especially petrol and diesel. If there is any limit on passing on fuel price hikes to consumers, the oil marketing companies (OMCs) would have to bear a notable burden on their profitability. However, some reports also indicate that OMCs have not...

PAT at Rs 21.4 bn was below our estimate of Rs 26 bn, as marketing business underperformed. GRM remained flat QoQ at USD 7.9/bl (our estimate: USD 7.3/bl), while core GRM fell USD 1.6/bl to USD 4.9/bl, vs. USD 0.8/bl decline in benchmark Singapore complex GRM.

Revenues increased 13% YoY due to higher crude throughput. EBITDA was lower than our estimates owing to lower GRM and lower marketing profits as compared to inventory gain in Q2FY18. Net Profit was below...

GRMs were at US$7.9/bbl below our estimate of US$8.2 /bbl mainly due to a lower-than-expected operational performance on the refining front. Inventory gains were at US$3/bbl. Subsequently, EBITDA at | 3188.2 crore was below our estimate of | 3400.5 crore The quarter witnessed higher other income of | 727.4 crore above our estimate of | 508.8 crore. This led to the upside in profitability, which was at | 2143.7 crore vs. our estimate of | 2028.4 crore...

Our SOTP target is Rs 581 (5.0x Dec 19E EV/e for standalone refining, 8x EV/e for marketing, 9x for pipeline and Rs 214/sh from invest.). Maintain BUY. BPCLs 3QFY18 EBITDA came in at Rs 31.88bn, down 3.9% YoY and 9.6% QoQ. This has been attributed to higher operating expenses at Rs 36.18bn (+15% YoY, +10% QoQ) and lower blended marketing margins at USD7.4/bbl (Rs 3/lit), down 11.3% YoY and 19.5% QoQ. Kochi refinery was under stabilisation in 3Q which has resulted in higher opex. APAT was Rs 21.44bn, down 5.6% YoY owing to higher depreciation (+40% YoY) and interest cost (+48.5%).

BPCL, unlike peers, reported weak set of profits in Q3FY18 driven by lower than expected GRM despite strong crude throughput and sales volume growth. Revenue increased 13.2% to Rs606 bn, EBITDA decreased 3.9% to Rs32 bn due to lower GRM and lower marketing profits while PAT declined 5.6% to Rs21.4 bn. Core GRM stood at US$4.9/bbl (reported GRM US$7.9/bbl) vs US$3.6/bbl. We expect the company's marketing margin to improve from Q4FY18 with lower crude oil price. Also, Kochi terminal should stabilize in coming quarters which would augment its GRM. We roll over our valuation to FY20 gives a new TP of...