Bharat Petroleum Corporation - Q1FY21 First Cut - ICICI Securities

(CMP - Rs. 421; MCap - Rs. 91368 crore)

Bharat Petroleum Corporation (BPCL) reported Q1FY21 results which were below our estimates on the profitability front. Revenues declined 37.7% QoQ to Rs. 50616.9 crore (our estimate: Rs. 44404.2 crore). On the refining front, reported GRMs at US$ 0.4/bbl (our estimate: US$ 3.6/bbl) were impacted by inventory loss of US$ 1.5/bbl. Marketing sales at 7.5 MMT were below the estimate of 8.3 MMT. However, better than expected profitability in marketing segment led to EBITDA at Rs. 3915.8 crore which was largely in line with our estimate of Rs. 3949.2 crore (also supported by marketing inventory gain of Rs. 1003 crore). Subsequently, the reported PAT stood at Rs. 2076.2 crore (our estimate: Rs. 2469.4 crore).

Q1FY21 Earnings Summary

- BPCL's topline declined 37.7% QoQ to Rs. 50616.9 crore (our estimate: Rs. 44404.2 crore) as fuel demand declined sharply during the quarter due to lockdown. Marketing sales were at 7.5 MMT, lower than estimate of 8.3 MMT

- BPCL achieved crude throughput of 5.1 MMT during the quarter and declined 38.7% QoQ, lower than our estimates of 5.9 MMT. The reported GRMs at US$ 0.4/bbl were below our estimates of US$ 3.6/bbl. Core GRMs were at US$ 1.9/bbl while inventory loss was at US$ 1.5/bbl during the quarter

- Better than expected profitability in marketing segment led to EBITDA at Rs. 3915.8 crore (vs. EBITDA loss of Rs. 732.8 crore in Q4FY20), also supported by marketing inventory gain of Rs. 1003 crore. Consequently, the reported PAT stood at Rs. 2076.2 crore against net loss of Rs. 1361 crore (our estimate: Rs. 2469.4 crore)

Fuel demand across the country was hit by Covid-19 led lockdown in Q1FY21. While demand has improved from April lows, it was still down ~12% YoY in July. BPCL increased retail prices in June post excise duty hike, which will support marketing margins. Global product spreads are still at lower levels and will affect GRMs. Improvement in GRMs and faster recovery in demand will be important for BPCL's performance in the near term. We will come out with an update soon.

Shares of BHARAT PETROLEUM CORPORATION LTD. was last trading in BSE at Rs.413.25 as compared to the previous close of Rs. 421.2. The total number of shares traded during the day was 573241 in over 9776 trades.

The stock hit an intraday high of Rs. 426.7 and intraday low of 408.9. The net turnover during the day was Rs. 239282191.

Source : Equity Bulls

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