Motilal Oswal - Bharat Petroleum Corporation Limited (BPCL) MOSL: BPCL (Buy)-Adj. EBITDA below estimate; core GRM at USD4.15/bbl

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Motilal Oswal

Swarnendu Bhushan

MOSL: BPCL (Buy)-Adj. EBITDA below estimate; core GRM at USD4.15/bbl

BPCL: Adj. EBITDA below estimate; core GRM at USD4.15/bbl

(BPCL IN, Mkt Cap USD12.3b, CMP INR389, TP INR535, 38% Upside, Buy)

BPCL's EBITDA of INR46b (+274% YoY, +23% QoQ) was above our estimate of INR33b. However, total inventory gain stood at INR27b (est. of INR5.7b) - refining inventory gain stood at INR12.75b (USD3.34/bbl) and marketing gain stood at INR14b. Adjusting for the same, EBITDA stood at INR19b (est. of INR27b; -28% YoY, -42% QoQ), significantly below our estimate, led by a poor core GRM. PAT stood at INR23b (est. of INR19b; +208% YoY; -14% QoQ), impacted by a forex loss of INR7.1b during the quarter. We have accounted for a forex loss along with other income.
Core GRM stood at USD4.15/bbl (est. of USD5.0; USD5.6 in 4QFY18 and USD6.9 in 1QFY18). Core GRM was lower due to a weak GRM at Kochi refinery; core GRM for MR was at USD5.3/bbl and for KR at USD3.05/bbl. Refinery throughput stood at 7.7mmt (+21% YoY, -1% QoQ), marginally below our estimate.
Domestic sales volume grew 9% YoY (+2% QoQ) to 11mmt in 1QFY19. Implied marketing margin inclusive of inventory gain stood at INR4.9/liter (+57% YoY, +7% QoQ). Net of inventory gain, marketing margin stood at INR3.8/liter.

10/08/2018 10 EN

Underlying

Bharat Petroleum Corporation Limited

Bharat Petroleum refines crude oil and markets petroleum products in India. Co. offers fuels and services, as well as lubricants, including automotive engine oils, gear oils, transmission oils, specialty oils, and greases; and liquid and gaseous fuels, illuminating oils, and other products from crude petroleum or bituminous minerals. Co. is engaged in the retailing of petrol, diesel, and kerosene. Co. also imports and exports fuel oil, naphtha, and base oil. Co. serves household and automobile sectors; public and private sectors; and various government establishments, such as defense, railways, state trading corporations, state electricity boards.

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INE029A01011 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Swarnendu Bhushan

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MOSL: BPCL (Buy)-Adj. EBITDA below estimate; core GRM at USD4.15/bbl

BHARAT PETROLEUM sees an upgrade to Slightly Positive due to a better fundamental star rating

MOSL: BPCL (Buy) - Better-than-expected result; reiterate it as the preferred pick in OMCs

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MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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