BPCL Increases by 5% Even With Poor Q4 Results; See What Analysts Say
In intraday trading on Friday, shares of Bharat Petroleum Corporation (BPCL) surged 5% to Rs 621.80 on the BSE after the board’s recommendation to issue bonus shares at a ratio of 1:1, meaning one new bonus equity share for every share already held.
For every share owned, the Maharatna public-sector undertaking (PSU) will issue one more share. According to BPCL, June 22, 2024, has been set as the record date for the issuance in order to ascertain which shareholders are eligible to receive the bonus shares.
Subject to shareholder approval, the board of the state-run oil marketing company (OMC) has also recommended a final dividend of ₹10.5 per share (post-bonus) of the same face value for the year 2023–2024, which is equivalent to Rs 21 per equity share (pre-bonus) of Rs 10 each.
BPCL Q4 Results: Important Data
BPCL’s refineries processed 39.93 million tonnes of oil in the 2023–24 fiscal year (April 2023–March 2024), up from 38.53 million tonnes in FY23. From 48.92 million tonnes in FY23 to 51.04 million tonnes in FY24, market sales grew by 4.33 percent.
According to a statement from BPCL, it blended ethanol at an average rate of 11.69 percent from 2023 to 2024, with the highest percentage being in the fourth quarter of FY24 at 12.15 percent. With the addition of 308 additional gas pumps, BPCL’s network now has 21,840 total members. In addition, 323 CNG stations were put into service, bringing the total number to 2,031.
“We have achieved unprecedented levels of operational and financial success in the areas of profitability, domestic market sales, and refining throughput. The company’s record profit after tax was Rs 26,673.50 crore, according to BPCL chairman and managing director G Krishnakumar.
Due to decreased refining margins, BPCL reported a 30% decline in net profit for the March quarter. The fourth quarter of the 2023–24 fiscal year had a consolidated net profit of Rs 4,789.57 crore, down from Rs 6,870.47 crore during the same time in the previous fiscal year. In January–March 2023, the turnover was Rs 1.34 lakh crore, practically unchanged from the previous year’s Rs 1.32 lakh crore.
In spite of rising input or crude oil prices, the third-largest oil refiner by capacity in India saw a 19.4% decline in EBITDA (earnings before interest, taxes, depreciation, and amortization) in the fourth quarter. This decline was primarily caused by declining refining margins and a pre-election reduction in the price of gasoline and diesel.
BPCL declared a record net profit of ₹26,858.84 crore for the whole fiscal year 2023–24, compared to a profit of ₹2,131.05 crore the year before. BPCL made $14.14 on average from the processing of each barrel of crude oil into fuel, compared to $8.83 per barrel in the previous fiscal year.
What Views Do Analysts Hold?
Citi has issued a buy recommendation for BPCL, with a Rs 760 target price. Pre-tax earnings for the firm were 20% less than the brokerage’s projections, and a Rs 1,800 crore impairment of assets in an arm resulted in a 39% drop in net income.
Analysts pointed out that despite this, the FY24 full-year EPS remained solid at Rs 125 per share.
Morgan Stanley reports that good quarterly results from Indian petroleum refiners point to a structural trend towards better profitability in FY24.
Results from the refinery hardware investments are starting to appear. The international brokerage saw that HPCL was able to increase its market share in gasoline, while BPCL significantly exceeded its margin.
Reduced gross marketing margins on gasoline and diesel might be the cause of the Q4 net profit decline. According to a letter from Motilal Oswal, margins had decreased to an average of Rs 8 and Rs 3.4 per liter, respectively, during the quarter. However, a Rs 2 pump price reduction that has been in place since March 15 may also have lowered shop profitability. On BPCL, the brokerage company is rated as “neutral.”
