Q4 Results: BPCL Profit Jumps Over Sixfold, Operating Margin Widens

Bharat Petroleum Corporation Ltd.’s quarterly profit beat estimates as it jumped more than sixfold on higher inventory gains.

Net profit rose 6.3 times on a sequential basis to Rs 3,125 crore in the January-March period, India’s second-largest state-run oil marketer said in its exchange filing. That’s the highest since at least June 2017. Analysts tracked by Bloomberg had projected the figure at Rs 2,736 crore.

Its revenue was down 6.6 percent over the previous quarter to Rs 73,990 crore, against the Rs 75,478-crore forecast. The foreign exchange gains reduced to Rs 275 crore from Rs 659 crore sequentially.

The company’s other expenses for the last financial year included Rs 700.38 crore toward losses on account of foreign currency transactions and translations.

Key Highlights:

• Operating profit jumped 6.2 times from the December quarter to Rs 4,805.1 crore.
• Operating margin swelled 550 basis points to 6.5 percent.
• Debt surged 25 percent from the previous year to Rs 29,099 crore.

BPCL’s average gross refining margin—the amount a refiner earns by refining one barrel of crude oil— was at $4.58 per barrel for the year-ended March compared to $6.85 a barrel a year ago. The GRM for the January-March period stood at $2.74 a barrel. The company had reported the lowest GRM among its peers for the quarter-ended December, beset by plant shutdowns and fire mishaps.

Other Highlights (Quarter-On-Quarter)

• Crude throughput was up 9.6 percent to 8.21 million metric tonnes.
• Sales volume rose 9.2 percent to 11.65 MMT.
• Other income increased 14 percent to Rs 1,057.6 crore.
• Employee cost up 29 percent to Rs 1,037 crore.

The company also reported inventory gains worth Rs 356 crore during the fourth quarter as Brent crude prices rose 30 percent and averaged around $63 a barrel. It had reported an inventory loss of Rs 3,333 crore in the previous quarter. Inventory gain or loss is the difference between the price at which a company buys crude oil and the price at which fuel is sold.

Petrol and diesel rates, too, moved in tandem with global crude prices during the period, which helped oil marketing companies to earn a steady gross marketing margin on sale of every litre of fuel, according to data compiled by BloombergQuint.

BPCL’s gross marketing margin was the highest in at least four years. Its gross marketing margin on petrol averaged at Rs 5.83 a litre from Rs 3.6 a litre in the preceding quarter, while for diesel it stood at Rs 5.85 per litre against Rs 3.2 per litre. Retail sales contribute nearly 40 percent to BPCL’s operating profit.

Besides, the company’s board recommended a final dividend of Rs 8 per equity share at a face value Rs 10 apiece, subject to shareholders’ approval. The final dividend will be paid within 30 days from the date of its declaration at the annual general meeting, the filing said.

Shares of BPCL ended 4.15 percent higher before the results announcement compared with a 4.52 percent gain in the benchmark NSE Nifty Energy Index.