Q3 is likely to be better operationally for BPCL, but diesel will remain under pressure sequentially due to marketing losses. Meanwhile, GAIL's profit is likely to decline due to lower LPG realization and gas business.
Among major oil and gas companies, BPCL and GAIL (India) are the next to announce their December 2022 quarter earnings on Monday. Q3 is likely to be better operationally for BPCL, but will be under pressure sequentially due to diesel marketing losses. Meanwhile, GAIL's profit is likely to decline due to lower LPG realization and gas business.
Last week, on Friday, shares of BPCL closed down by 2.86% at ₹336.70 on BSE. Shares of GAIL closed at ₹99.15, down 1.83%.
BPCL Q3 Preview:
In its preview report, ICICI Direct said, BPCL's crude throughput is expected to be flat QoQ at 8.9 MMT. Marketing segment volumes are expected to grow 3.3% QoQ. GRM is expected to be lower by US$12/bbl, US$4.8/bbl QoQ considering individual product fracking trend and inventory losses. On the marketing front, the brokerage expects losses to reduce due to fall in crude oil prices.
BPCL's marketing segment (42.5 MMT) is larger than its refining segment (30.1 MMT). "We estimate EBITDA at ₹3,098.8 crore, a growth of 116% quarter-on-quarter," said ICICI Direct's note. However, the brokerage expects BPCL's revenue to decline 0.5% YoY and 8.1% QoQ to ₹1,17,980.8 crore, and PAT to decline 44% YoY to ₹1,378.5 crore.
Meanwhile, according to Kotak Institutional Equities, BPCL's EBITDA will improve sequentially, driven by (1) lower under-recoveries on auto fuels; (2) advanced middle distillate cracks; and (3) a marginal benefit from the export tax. But brokerages assume --- reported refining margins of $15/bbl; (2) increasing crude oil production by 5% qoq to 9.3 million tonnes; (3) under-recovery of about Rs 28 billion; and (4) an inventory loss of about Rs7 billion with a loss of US$1/bbl in the refining and $0.2/bbl in the marketing business.
While BPCL is likely to report better results of operations, but without the subsidy, losses would be higher quarter-on-quarter due to diesel marketing losses, said Prabhudas Lilladher's note.
In the September 2022 quarter, BPCL's net loss narrowed sharply to ₹338.49 crore as compared to a loss of ₹6,147.94 crore in the previous quarter. Consolidated revenue stood at ₹1,28,355.72 crore, up 25.91% YoY but down 7.27% QoQ. BPCL's market sales for the half year ended September 30, 2022 were 23.20 MMT as against 19.54 MMT in the year-ago period. Sales were driven by MS-Retail (24.70%), HSD-Retail (29.78%), and ATF (97.72%).
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