BPCL Q3 Preview: Net profit may jump 51% on strong refining, marketing margins

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State-run Bharat Petroleum Corporation Ltd (BPCL) is anticipated to post a significant surge in net profit for the December quarter, both year-on-year (YoY) and sequentially, driven by robust refining and marketing margins coupled with minimal inventory losses. BPCL is set to announce its Q3FY25 earnings on January 22.

BPCL’s net profit is expected to rise 51 percent YoY to Rs 5,130.40 crore in Q3, marking a sequential growth of 114 percent. Revenue is forecast to decline 10 percent YoY but remain stable quarter-on-quarter (QoQ) with a marginal increase of 1.1 percent to Rs 1.04 lakh crore. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) is projected to increase 36 percent YoY and 86 percent QoQ to Rs 8,481.1 crore.

What factors are driving the earnings?

A report by JM Financial highlights, “Oil marketing companies (OMCs) are likely to report substantial QoQ improvement in EBITDA, supported by strong auto-fuel marketing margins (partially offset by LPG losses), recovery in diesel cracks, and minimal inventory loss.”

The average Singapore Gross Refining Margin (GRM) for the quarter stood at $5 per barrel, an increase of $1.4 per barrel QoQ, reflecting a rise in product cracks.

Factor 1: Analysts expect BPCL's Q3 GRMs to improve, supported by stronger core operations and minimal inventory losses. Marketing margins remain robust, with an average GMM of Rs 13.2 per litre for petrol and Rs 9.4 per litre for diesel, further bolstering performance. While QoQ performance of OMCs is likely to strengthen, potential government aid for LPG subsidies could provide additional relief, though higher forex losses may weigh on profitability.

Factor 2: Diesel marketing margins rose 62 percent QoQ to Rs 8.6 per litre in Q3FY25, while petrol margins climbed to Rs 12 per litre from Rs 9.1 per litre QoQ, driven by a decline in crude oil prices despite stable retail prices. Brent crude prices averaged 7 percent lower QoQ at $75 per barrel in Q3FY25, remaining flat between quarter-end periods with no refining inventory adjustments for BPCL.

What to look out for in Q3

Management's outlook on refining and marketing margins, throughput recovery, and crude price impacts will be key to future performance. Throughput is expected to drop 10–14 percent YoY/QoQ due to temporary refinery shutdowns, with recovery timelines being critical. Strong marketing margins are anticipated, and insights into their sustainability amid crude price volatility will be crucial.

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