BPCL Q2 net seen down 92.6% at Rs 374.3cr: Motilal Oswal

Motilal Oswal has come out with its second quarter (July-September) earnings estimates for the oil & gas sector. The brokerage house expects Bharat Petroleum Corporation (BPCL) to report a 149 percent growth quarter-on-quarter (down 92.6 percent Y-o-Y) in net profit at Rs 374.3 crore.

Sales of Bharat Petroleum Corporation are expected to increase by 7 percent Q-o-Q (up 10.5 percent Y-o-Y) to Rs 62803.1 crore, according to Motilal Oswal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 37.7 percent Q-o-Q (down 70.3 percent Y-o-Y) to Rs 1247 crore.

Motilal Oswal's Report on Bharat Petroleum Corporation:

As in earlier quarters, profitability of OMCs (BPCL, HPCL, IOCL) would depend more on subsidy sharing, which is ad-hoc, than on business
fundamentals. Government subsidy compensation typically comes with a delay.

2QFY14 gross under-recoveries are up 42 percent Q-o-Q due to the impact of rupee depreciation and increase in crude price.

For FY14/FY15, we model OMCs' subsidy sharing at nil and upstream sharing at INR 700 billion/650 billion, with the government sharing the balance.

We peg refinery throughput at 5.9mmt for 2QFY14 v/s 5.9mmt in 2QFY13 and 5.6mmt in 1QFY14.

We expect BPCL to report PAT of INR 3.7 billion, led by our assumption of INR 200 billion subsidy sharing by the government in 2QFY14.

BPCL trades at 9.5x FY15E EPS and 1.2x FY15E BV. E&P upsides from Mozambique and Brazil are the key medium-term triggers.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.