Bharat Petroleum Corp Ltd swung into a consolidated net profit of Rs 8,501 crore in Q2 FY24, against a net loss of Rs 304 crore a year ago, mainly due to softer crude oil prices and low raw material costs. BPCL’s consolidated revenue fell about 9% year-on-year to Rs 1.17 lakh crore in the July-September quarter.
BPCL’s quarterly earnings beat street expectations. The company was projected to report a net profit of Rs 6,580 crore on net sales of Rs 1.03 lakh crore, according to a Moneycontrol poll of 10 brokerage estimates.
The average gross refining margin (GRM) of the PSU oil refining and marketing company was $15.42 per barrel for the half-year ended September 30. This compares with $22.30 per barrel in the year-ago period.
BPCL shares closed flat at Rs 335. Its shares have fallen 12 percent in the last three months.
Improving margins
Marketing margins improved supported by inventory gains from discounted Russian crude, offsetting the impact of unchanged petrol and diesel prices.
Last year, the state-owned oil marketing companies dealt with higher crude costs in the aftermath of the Russia-Ukraine war. The companies had to freeze retail fuel prices to avoid further inflationary pressures in the import-dependent nation and to ensure stable economic recovery from the pandemic.
The freeze caused heavy losses for all government-owned fuel retailers in April last year. However, as the crude prices softened, margins rebounded even as the fuel rates remained the same.
Shrinking Russian crude discounts fan concerns
In July, analysts said there has been a decline in earnings momentum due to a reduced discount on Russian crude impacting refining, and the increasing oil prices affecting marketing.
However, in August citing a senior government official, Moneycontrol reported that despite fears of higher global oil prices, India is expected to continue purchasing crude from Russia at discounted rates as long as crude stays below $90 a barrel.
With few takers for Moscow's oil, India is confident that Russia will not push to breach the $60 per barrel ceiling for Russian crude even as prices go up, the official told Moneycontrol.
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