MOSL: BPCL (Neutral)-Marginally better than expected refining performance
BPCL: Marginally better than expected refining performance
(BPCL IN, Mkt Cap USD14.5b, CMP INR476, TP INR522, 10% Upside, Neutral)
- Marginally higher-than-expected refining throughput and refining margin more than compensated for the marginally weaker implied gross marketing margin, resulting in a slight beat on EBITDA.
- Continued strong marketing margin has been a solace in a weak refining margin environment.
- BPCL has been trading at forward PBV of the true deregulated period of FY15-18. We do not see much upside despite the expected divestment. Reiterate Neutral.
Marginal beat on EBITDA
- EBITDA of INR27b (-2% QoQ) came in 5% higher than our estimate. Due to the sharp decline in oil prices in 3QFY19, BPCL had witnessed an inventory loss of INR33.3b v/s a gain of INR5.4b in 3QFY20 and a loss of INR260m in 2QFY20.
- Forex loss was at INR1b in the quarter, as against a gain of INR6.6b in 3QFY19 and a loss of INR3.9b in 2QFY20.
- Lower effective tax rate of 28.9% offset lower-than-expected other income, leading to PAT of INR11.6b (5% beat; -32% QoQ).
- For 9MFY20, standalone EBITDA stands at INR76b (-5% YoY), primarily due to a poorer refining margin. 9MFY20 standalone PAT stands at INR39.5b (-1.5% YoY).
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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