State-run oil refiner Bharat Petroleum's share price gained on January 31 as the company posted higher-than-expected gross refining margins (GRM) of $15.9 per barrel while the Street expected $14.5/bbl.
GRM is the amount that refiners earn from turning each barrel of crude oil into fuel products. On a yearly basis, BPCL's GRM was higher by $6/bbl.
Meanwhile, BPCL posted 37 percent year-on-year drop in Q3 net profit to Rs 1,747 crore.
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At 10:45 am, the stock was quoting at Rs 343.60 on the NSE, higher by 2.5 percent. The stock is trading above its 200-day simple moving average (SMA), and is close to its 10-day, 20-day SMA.
BPCL has fallen nearly 12 percent in the past one year, as its divestment progress took a backseat. The company also left prices unchanged in 2022 despite soaring crude prices to control the inflation in the country, which dented its bottom line.
In Q3, the company's revenue from operations came in at Rs 1.33 lakh crore, rising 13.48 percent from Rs 1.17 lakh crore in the corresponding quarter of the previous year, it said in an exchange filing.
In the marketing segment, sales volume came in at 12.8 million metric tonne, which was 15 percent higher YoY. "Management highlighted that the shutdown at IOCL’s Panipat refinery helped BPCL offtake higher volume in Q3 FY23 with a few bulk customers also shifting to retail," noted domestic brokerage Motilal Oswal Financial Services.
Margins for retail fuels also improved sequentially, with positive Rs 10 per litre for petrol (against loss of Re 1 in Q2) and a loss of Rs 6.5 per litre for diesel (against loss of Rs 10 in Q2), noted ICICI Direct.
The brokerage expects GRMs to remain strong over FY24-25E as global refining demand-supply balance to will tight over the next 2-3 years, with recovery in Chinese and Indian demand, limited supply additions and constraints on Russian product exports.
MOFS has a Neutral rating on the stock with a target price of Rs 348 apiece. ICICI Securities has a Buy rating on the stock with Rs 334 target price.
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