Bharat Petroleum Corporation Ltd. share price target

4 June 2020 BPCL posted an EBITDA beat in 4QFY20 on better-than-expected reported GRM counterpoised with marginally weaker marketing margins. However, refining throughput (+2% YoY) and marketing sales (-5% YoY) were in line with our estimates. The company has confirmed that throughput ramped up to 83% after a dip to ~63% in Apr20 for all group refineries. Sales demand has also revived and is now 30% lower YoY (up from being ~55% lower in Apr20). Due to slim possibility of a divestment in these circumstances, we maintain a Neutral stance on BPCL. Also, we do not see much upside despite the expected divestment. Reported EBITDA came in higher than est. at INR5.9b (-87% YoY) owing to better-than-expected refining margin. Inventory loss for the quarter stood at INR49b (refining at INR29.6b and marketing at INR19.4b). Adj. for the same, EBITDA came in at INR54.9b.

BPCL reported a Q4FY20 EBITDA loss of Rs 6.2bn owing to inventory/forex losses of Rs 49bn/Rs 121bn.

BPCL with a fully integrated operation remains a prized asset and we expect aggressive bidding by global majors when divestment process kicks in. We marginally tweak our FY21/22 earnings estimates. During FY20, core EBIDTA adjusted for inventory loss was healthy at Rs130bn (+14%YoY) despite lower refining margins ($2.5/bbl vs $4.6/bbl in FY19). Sharp drop in...

A sharp reduction in oil demand owing to Covid-19 outbreak resulted in a significant drop in crude oil prices. As a result, average Brent crude oil prices declined by US$12/bbl QoQ to US$50.6/bbl with closing Brent price at US$21.5/bbl. On account of the same, the company reported marketing inventory loss of | 1937 crore. However, core marketing margins were steady during the quarter. In terms of marketing sales, BPCL reported degrowth of 5.5% YoY (mainly due to diesel sales decline) to 10.7 MMT, above our estimates. Going forward, we expect marketing sales volume to improve at 5.1% CAGR in the next two years. Crude throughput in Q4FY20 was up...

Crude prices witnessed a sharp decline in March due to spread of Covid-19 across the globe and Opec deal failure. A likely increase in oil output by both Saudi Arabia and Russia from Q1FY21E and lower demand are expected to lead to a sizeable oversupply in the oil market. Subsequent low oil prices are expected to significantly affect ONGC's profitability....

Dismal Performance with No Improvement in GRM; Maintain REDUCE Bharat Petroleum Corporation Ltd. (BPCL) has delivered a disappointing performance in 3QFY20. It reported GRM of US$3.23/bbl below ours/consensus estimates of US$4.1/bbl. Petrol/diesel sales volume grew by 5.9%/(1.6%) YoY lower than the industry growth rate of 7.1%/0.2%. It clearly implies that BPCL has lost market share to private retailers during the quarter. EBITDA increased by 248% YoY and 14% QoQ to Rs 27bn (6% below the consensus estimate/8% higher than our estimate) mainly due to 12% YoY growth in crude throughput of refineries, comparative higher YoY GRM and improved net marketing margin on diesel. Net profit grew by 155% YoY (down 26%...

Dismal Performance with No Improvement in GRM; Maintain REDUCE Bharat Petroleum Corporation Ltd. (BPCL) has delivered a disappointing performance in 3QFY20. It reported GRM of US$3.23/bbl below ours/consensus estimates of US$4.1/bbl. Petrol/diesel sales volume grew by 5.9%/(1.6%) YoY lower than the industry growth rate of 7.1%/0.2%. It clearly implies that BPCL has lost market share to private retailers during the quarter. EBITDA increased by 248% YoY and 14% QoQ to Rs 27bn (6% below the consensus estimate/8% higher than our estimate) mainly due to 12% YoY growth in crude throughput of refineries, comparative higher YoY GRM and improved net marketing margin on diesel. Net profit grew by 155% YoY (down 26%...

Upstream companies and RIL will also be hit from weakening global economy and lower oil and gas realization. Global crude oil prices have crashed to USD35/bbl on disagreement between OPEC and Russia on extent of production cuts in a weakening global economy. Higher production cuts over current levels of 2.1mbpd were expected to help balance oil markets. With no agreements, we expect oil prices to remain weak. The OMCs with high leverage to low crude oil prices are best placed especially HPCL and BPCL. Our sensitivity suggests OMC...

Bharat Petroleum Corporation Ltd (BPCL) is one of India's leading oil & gas companies. It operates refineries located in Kochi, Mumbai, Bina and Numaligarh. The company's marketing infrastructure consists of...

BPCL consolidated net sales fell 6% to Rs 74959.1 crore for the quarter ended December 2019 compared to corresponding previous year period. This included subsidy from the government of Rs 37.97 crore down 86% on a y-o-y basis. Excluding compensation from the government sales of the company fell 6% to Rs 74921.2 crore. OPM of the company rose 220 bps to 4.1%. As a result operating profits rose 109% to Rs...