Analyst Corner: ‘Hold’ on BPCL; keep faith in refining turnaround
BPCL’s Q3FY20 net of Rs 12.6 bn was well below JEFe hurt by weak operational performance yet again. Core Ebitda missed by 36%, e.g., with refining and marketing margins weak with share losses in diesel too although debt did ease q/q. Looking ahead, we still hope for that elusive refining turnaround with upside risk to auto fuel marketing margins too but its richer-than-peer valuations that already bake in some of the divestment upside predicates our ‘hold’ rating.
BPCL’s Q3FY20 Rs 12.06 bn standalone net came 41% below JEFe despite inline inventory gains (Rs 5.4bn) and forex losses (Rs 0.9 bn). Lower other income (-32% q/q) hurts as did higher-than-expected interest costs although debt did ease Rs 17 bn q/q helped by lower w-capital and ~Rs 9 bn in subsidy payments late in December.
