MOSL: BPCL (Buy) - Better-than-expected result; reiterate it as the preferred pick in OMCs
BPCL: Better-than-expected result; reiterate it as the preferred pick in OMCs
(BPCL IN, Mkt Cap USD13.3b, CMP INR455, TP INR615, 35% Upside, Buy)
- BPCL reported a beat on our estimates, driven by a better-than-expected performance in the Marketing segment (volumes were down 14% QoQ). Refining throughput in 1QFY22 was aligned with demand moderation due to the second COVID wave (throughput was down 18% QoQ).
- With the easing of the lockdowns in July, demand for petroleum products such as MS/LPG has surpassed 2019 levels (+5%/+10%), while HSD demand remains subdued (-8%).
- The management stated that an increase in personal mobility due to COVID continues to drive higher demand for MS (thus aiding cracks). Demand for HSD is also seeing strong recovery in the US, coupled with the re-opening of the Chinese and Indian economies. Although, high levels of HSD inventory globally have resulted in suppressed cracks.
- SG GRM averaged higher MoM at USD2.9/bbl in July (v/s USD2/bbl in 1QFY22), the highest ever since the COVID outbreak in Feb'20. Recovery is entirely driven by higher demand for gasoline (margins at USD10.1; +USD3 MoM), while ATF/gasoil margins remain the same MoM at USD4.3/USD4.7. SG GRM is higher at around USD3.6/bbl in Aug (to date).
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.
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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