BPCL Q1 Results: Inventory Gain Aids Return To Profit Amid Tumbling Refining Margin
An attendant sits between two fuel pumps at a BPCL fuel station in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

BPCL Q1 Results: Inventory Gain Aids Return To Profit Amid Tumbling Refining Margin


Bharat Petroleum Corp. Ltd. reported a profit in the quarter ended June as inventory gains offset the impact of lower sales and weak refining margin.

Net profit stood at Rs 2,076 crore compared with a loss of Rs 1,361 crore in the previous three months, according to the state-owned oil marketer’s exchange filing. Analysts’ estimates compiled by Bloomberg had pegged a profit of Rs 1,505 crore.

  • Revenue fell 44% sequentially to Rs 38,785 crore—lower than the estimated Rs 42,169 crore.
  • Operating profit stood at Rs 3,916 crore compared with an operational loss of Rs 619 crore.
  • Ebitda margin stood at 10.1%.
  • Gross refining margin—what BPCL earns for refining one barrel of crude—stood at $0.39 per barrel compared with $0.75 earlier.

Global crude oil prices have rebounded after a historic price crash in April. Brent crude—the Asian benchmark—jumped over 80%, registering its best quarterly gains in 30 years. Most of the gains were due to improving oil demand despite the Covid-19 crisis, the OPEC+ agreeing to a production cut and higher consumption post-lockdown in China.

As market price of crude oil rises, refiners like BPCL that bought existing stock at a cheaper rate ended up selling it higher, resulting in inventory gains.

That said, operationally it remained a challenging quarter for the oil retailer. The nationwide lockdown to curb the pandemic nearly wiped out demand for fuel as fewer vehicles plied on the roads. Fuel consumption in India had hit a 13-year-low in April. And while demand is steadily recovering to pre-Covid levels, BPCL’s production and sales took a hit.

  • Crude output fell 39% to 5.14 million metric tonnes.
  • Sales volume fell 26% to 8.32 million metric tonnes.

“During this quarter, there was lower refinery throughput and revenue from operations, mainly due to lower demand of petroleum products,” BPCL said in its filing. “With gradual reopening of the economy, the corporation expects refinery throughput and revenue from operations will improve and will be at normal levels post Covid-19 impact and removal of complete lockdown restrictions.”

Shares of BPCL closed 0.14% lower ahead of the quarterly results, tracking the benchmark BSE Sensex that fell 0.15%.

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