Bharat Petroleum Corporation Ltd. share price target

BPCL: Bharat Petroleum Corporation (BPCL) is India's 2nd largest Oil Marketing Company with market share of ~21%. BPCL is the most efficient refiner among PSU OMCs; GSPL: Tariff hike expected: To address industry's concerns, PNGRB (gas regulator) has initiated public consultation process to amen..

BPCL Q2FY17 results were below our expectation due to lower than expected GRMs and lower volume. Revenue declined 3.8% YoY to Rs447 bn, EBITDA was up 3.7% to Rs13.8 bn and net profit grew 28.2% YoY to Rs13.1 bn. Crude throughput increased 7.2% YoY to 6.4mmt while sales volume increased 4.7% YoY to 9.5mmt. GRM came at US$3.1/bbl in Q2FY17 vs US$3.9/bbl in Q2FY16 (IDBIest US$3.8/bbl) due to higher inventory loss in Kochi terminal. The company reported inventory loss on product of Rs3.6 bn vs Rs7.4 bn in Q2FY16. The company expects full commissioning of Kochi's expansion to start from Q4FY17 which would boost GRMs by around US$1.5/bbl from FY18E. Bina/NRL refineries reported a GRM of...

BPCL reported an EBITDA of Rs 13.8bn in 2QFY17 led by lower GRM (inventory impact is not disclosed) and product inventory losses of Rs 3.6bn. Higher other income (write-back of prior provisions of Rs 2.3bn) resulted in RPAT of Rs 13.1bn. Results are not comparable owing to inventory and forex impacts.

ICICI Securities Ltd | Retail Equity Research BPCL reported its Q2FY17 result which was below our estimates on profitability front. The topline declined 3.7% QoQ to | 54913.2 crore, came marginally below our estimate of | 56899.9 crore. EBITDA declined by 64.8% QoQ to | 1381.4 crore, below our estimate of | 2460.7 crore, mainly due to GRMs, which came lower at US$3.1 /bbl against our estimate of US$4.9 /bbl Subsequently, PAT declined 50.2% QoQ to | 1305.2 crore, below our...

BPCL reported an EBITDA of Rs 39.2bn in 1QFY17 led by product inventory gains of Rs 12.8bn (refining gains are not disclosed). RPAT was Rs 26.2bn. Results are not comparable owing to inventory and forex impacts.FY16 has been outstanding for OMCs led by (1) Strong GRM, (2) Higher profits in the marketing owing to higher volumes at lower product prices and healthy marketing margins, and (3) Reduced interest burden owing to lower subsidy receivables.Growth in FY17 may be challenging considering the higher base and muted GRM trend in 2Q. The benefits of lower crude prices (balance sheet healing, lower interest cost) are priced in. Expansion in marketing margins is the only trigger left for OMCs. However, up-gradation/capacity expansion (in 4QFY17) of Kochi refinery will be an additional trigger for BPCL.

They remain positive on BPCL owing to its superior refining assets, rising capacity/complexity of Kochi refinery and possible upsides in marketing margins. However, the stock has moved up by ~49% over the past 6-months and we see a correction in the near term (better entry point) led by the weakness in GRM and low chances of inventory gains. Their SOTP target is Rs 650 (4.5x FY18E EV/e for standalone refining, 6.5x EV/e for marketing, Rs 62/sh from upstream and Rs 96/sh from other investments). Maintain BUY.

BPCL reported its Q1FY17 results, which were above our estimates. The topline increased 29% QoQ to | 57015.8 crore, above our estimate of | 48631.3 crore mainly due to a change in accounting standards to IND-AS • EBITDA increased 12.3% QoQ to | 3919.2 crore, higher than our estimate of | 2884.8 crore, mainly due to product inventory gains and higher market sales QoQ. However, GRMs came in lower at US$6.1 /bbl against our estimate of US$6.5 /bbl • Subsequently, PAT increased 2.8% QoQ to | 2620.5 crore, higher than our estimate of | 1854.6 crore. There was no subsidy burden on the company for the quarter.

The management has communicated that the Kochi refinery expansion project is running on schedule and is expected to be fully commissioned in Q4FY17 and would lead to ~US1.5/barrel improvement in GRMs. The improvement in refining margins will be the key factor to watch along with the fuel subsidies. Going forward, we expect stable marketing margins over the next two years. Hence, we have a BUY recommendation on the stock with a target price of | 665 (based on average of P/BV multiple: | 611/share and P/E multiple: | 719/share).

BPCL Q1FY17 adjusted earnings was below our expectation due to lower than expected GRMs (Reported result was above expectation due to inventory gain). Revenue declined 9.7% YoY to Rs469 bn, EBITDA was up 2.7% to Rs39 bn and net profit grew 10% YoY to Rs26 bn. However, the company reported lowest EBITDA/PAT growth during the quarter compared to its peer group. Crude throughput increased 2.1% YoY to 6.1mmt while sales volume increased 8.4% YoY to 10.1mmt. GRM came at US$6.1/bbl in Q1FY17 vs US$8.6/bbl in Q1FY16 which was lowest amongst peer (HPCL - US$6.8/bbl and IOC - US$10/bbl). The company reported inventory gain on product at Rs12.8 bn vs Rs2 bn in Q1FY16....

Bharat Petroleum Corporation (BPCL) has embarked upon initiatives to boost its nonfuel revenues against the backdrop of rapidly changing share of energy sources, deregulation of the sector and evolving customer trends. While it would be too early to discuss any specific financial numbers, we believe BPCL should benefit in the near term from its improved brand value and higher volumes due to increasing footfalls at the target outlets. BPCL management also mentioned that new players would not be able to justify investments at the current levels of auto fuel marketing margins, which are well below international peers. We believe this strengthens the case for increasing...

ICICI Securities Ltd | Retail Equity Research BPCL reported its Q4FY16 results, which were above our estimates. Revenues declined 5.3% QoQ to | 44197.1 crore but came in above...

ICICI Securities Ltd | Retail Equity Research BPCL reported its Q3FY16 results with the topline remaining flat QoQ revenue at | 46666.62 crore. Higher total market sales of 9.7 MMT in...