BPCL sails through Q1FY21; news on its divestment will be key for the stock
Last month, shares of state-run Bharat Petroleum Corp. Ltd (BPCL) had increased by about 25% in just four trading days on renewed expectations about its privatization. News reports suggested that many firms intended to participate in the bidding process and this boosted sentiments. However, with the deadline for submission of expression of interest being extended to September-end, the BPCL stock has cooled a bit, though the shares are 12% up since mid-July.
The company’s shares declined by about 2% on Friday after the announcement of the June quarter results. BPCL’s last quarter net profit was better than Bloomberg’s consensus estimates. During the pandemic crisis when firms are struggling to earn revenues, let alone eke out a profit, BPCL’s 93% year-on-year (y-o-y) growth in net profit to ₹2,076 crore brings comfort. Earnings before interest, tax, depreciation and amortization (Ebitda) rose 80% to ₹3,915 crore.
BPCL’s marketing segment did well because of robust margins, though its volumes declined. The marketing segment also had an inventory gain. However, the refining segment suffered because of subdued margins.
