Bharat Petroleum Corporation (BPCL) is likely to report a better set of numbers for Q4 FY24 on a sequential basis. However, the oil marketing company (OMC) may report a hit on its profits on a year-on-year (y-o-y) basis due to weakening marketing margins and price volatility, according to analyts.
The ₹2 per litre cut in retail prices of petrol and diesel, with effect from March 15, is also expected to impact earnings, albeit on a limited scale.
BPCL’s gross refining margins (GRM) for April-December 2023 was $14.72 per barrel against $20.08 in the year-ago period before factoring the impact of special additional excise duty and road and infrastructure cess. Market sales grew 0.86 per cent y-o-y reaching 12.92 mt in Q3 FY24.
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In FY23, it reported an average GRM of $20.24 per barrel (FY22: $9.66 per barrel) before factoring the impact of the duty and cess. Its sales stood at 48.92 million tonnes.
BPCL’s stock price has advanced 77 per cent over the past one year compared to HPCL (107 per cent) and Indian Oil Corporation (119 per cent).
Volume growth for BPCL is back-end loaded, driven by the ₹50,000-crore petrochemicals project that will commence operations in FY28, Motilal Oswal Financial Services said in an April 16 commentary.
According to JM Financial, the strong pricing power of OPEC+ will continue to support brent crude price at around $80 per barrel, which is the fiscal break-even crude price for Saudi Arabia. This is a sweet spot for ONGC and Oil India.
“We believe OMCs’ risk-reward still appears unfavourable as it’s still discounting higher-than-historical GRM while ignoring risk to marketing margin on account of elevated oil price,” it added in an April 19 report.
India’s largest OMC, Indian Oil Corporation (IOC), reported a y-o-y and q-o-q hit on its Q4 FY24 net profits on account of shrinking margins and higher prices. Its average GRM for FY24 was $12.05 per barrel against $19.52 a year-ago. Core GRMs after offsetting inventory loss/ gain stood at $11.44 per barrel in FY24 against $20.14 in FY23.
At 12.23 pm, BPCL’s share price dipped 1.58 per cent to ₹610.50 on the NSE on Thursday.