Sharekhan's research report on Bharat Petroleum Corporation
Q4FY2021 operating profit/adjusted PAT at Rs. 5,058 crore/Rs. 3,924 crore, up 17.5%/28.3% q-o-q and beat of 41%/65% versus our estimates, led by higher-than-expected inventory gain of Rs. 3,578 crore, core GRM of $2.5/bbl, and other income. Reported GRM at $6.6/bbl was fueled by inventory gain of $4.2/bbl; market share gain in diesel by 26 bps y-o-y to 24.4%. Refinery throughput stood at 8.4 mmt (up 16% q-o-q) and marketing sales volume was at 11.8 mmt (up 4% q-o-q). Q1FY2022 refinery throughput and marketing sales volume are expected to be impacted by lockdowns; however, core earnings are likely to improve over FY2022E-FY2023E with cyclical recovery in GRM and potential improvement in marketing margin (private players would hold 40% market share in auto fuel post privatisation of BPCL). Privatisation (expected by December 2021 with possibility of one quarter delay) remains the key to re-rating trigger for BPCL and could create long-term value for investors.
Outlook
Hence, we maintain a Buy on BPCL with an unchanged PT of Rs. 520.
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