BPCL (Q2 FY13)

India Infoline News Service | Mumbai |

BPCL (Q2 FY13)

CMP Rs333, Target Rs350, Upside 5.1%

  • Net sales for Q2 FY13 rise 34.5% yoy driven by 1) Government compensation accounted for in Q2 FY13 at Rs72.4bn vis-à-vis nil in Q2 FY12 2) 10.2% yoy rise in market sales 2) Higher average realizations in Rupee terms (+6.5% yoy)

  • Upstream companies shared under recovery burden worth Rs36.2bn in Q2 FY13 v/s Rs16.4bn in Q2 FY12

  • Throughput was higher by 6.4% yoy at 5.9mt. GRM were at US$6.46/bbl (improvement of $4.79/bbl yoy) on back of 1) Improved product cracks as exhibited by Singapore margins 2) Inventory gains of Rs4.42bn v/s inventory loss Rs24mn in Q2 FY12.

  • Net profit of Rs50.3bn was reported for the quarter.

  • With upsides from E&P largely priced in, we retain the Market Performer on the stock.

Result table
(Rs m) Q2 FY13 Q2 FY12 % yoy Q1 FY13 % qoq
Net sales 568,879 423,071 34.5 545,484 4.3
Material costs (232,642) (198,637) 17.1 (250,944) (7.3)
Purchases (267,296) (219,959) 21.5 (333,763) (19.9)
Personnel costs (7,345) (4,285) 71.4 (5,832) 25.9
Other overheads (7,715) (27,758) (72.2) (36,445) (78.8)
Operating profit 53,880 (27,568) (295.4) (81,500) (166.1)
OPM (%) 9.5 (6.5) 1599 bps (14.9) 2441 bps
Depreciation (3,983) (4,600) (13.4) (4,801) (17.0)
Interest (4,117) (4,532) (9.1) (5,205) (20.9)
Other income 4,568 4,408 3.6 3,138 45.6
PBT 50,348 (32,293) (255.9) (88,368) (157.0)
Adjusted PAT 50,348 (32,293) (255.9) (88,368) (157.0)
Adj. PAT margin (%) 8.9 (7.6) 1648 bps (16.2) 2505 bps
Reported PAT 50,348 (32,293) (255.9) (88,368) (157.0)
Ann. EPS (Rs) 278.5 (357.3) (178.0) (977.7) (128.5)
Source: Company, India Infoline Research

Net sales grow led by promised government compensation

Bharat Petroleum Corporation Ltd (BPCL) reported 34.5% yoy rise in net sales to Rs568.8bn for Q2 FY13. The growth was mainly led by the government share which was accounted at Rs72.4bn vis-à-vis nil in corresponding quarter last year. Sans the government share, the net sales grew by 17.3% driven by 1) 10.2% yoy growth in market sales 2) Higher rupee realizations (+6.5% yoy).

Total market sales for the quarter were recorded at 7.7mmt, implying a 10.2% yoy growth mainly led by HSD and MS segments which grew by 13.9% yoy and 8.8% yoy respectively. While LPG at 870tmt was a moderate 2.2% up yoy, SKO volumes de-grew by 6.3% yoy. During Q2 FY13, BPCL accounted for Rs36.2bn as compared to Rs16.4bn in Q2 FY12 from upstream companies in the form of discounts on purchase of crude oil, LPG and SKO.


Refining segment clocks a good performance

The refining profits grew five times on a yoy basis mainly on back of higher crude throughput, better GRM’s and a depreciated currency. The GRM’s for the quarter were recorded at $6.46/bbl mainly on back of improved product cracks and inventory gains of Rs4.42bn in the quarter. The crude throughput at 5.9mt was higher by 6.4% yoy. Additionally, Rs/USD depreciated by ~20% over the year to further help the refining segment.


Net profit at Rs50.3bn

BPCL reported a profit of Rs50.3bn on back of accounting for the government compensations of Rs72.4bn during the bygone quarter. Additionally the PAT was helped by foreign exchange gain of Rs11.6bn vis-à-vis a loss of Rs8.74bn recorded in Q2 FY12. Meanwhile the heavy interest payments continued to siphon away a significant part of the profits, with the interest payments in the quarter recorded at Rs4.2bn. The Debt on the books at the quarter end was recorded at Rs25.6bn.  


E&P upsides priced in; Maintain MP

OMC’s continue to be plagued with a lot of uncertainties such as 1) varying crude oil prices, 2) depreciating rupee, 3) sporadic cash flows from the government, etc. In this scenario, although BPCL has partially insulated itself with significant discoveries in its E&P portfolio, but we believe the upsides are fairly priced in. We thereby maintain retain our Market Performer rating with a 9-month price target of Rs350.


Cost analysis
As a % of net sales Q2 FY13 Q2 FY12 bps yoy Q1 FY13 bps qoq
Material costs 40.9 47.0 (606) 46.0 (511)
Purchases 47.0 52.0 (500) 61.2 (1,420)
Personnel Costs 1.3 1.0 28 1.1 22
Other overheads 1.4 6.6 (520) 6.7 (532)
Total costs 90.5 106.5 (1,599) 114.9 (2,441)
Source: Company, India Infoline Research

BSE 522.70 0.65 (0.12%)
NSE 521.30 [1.75] ([0.33]%)

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