Motilal Oswal's research report on BPCL
BPCL reported GRM of USD18.5/bbl in 2QFY24, a substantial improvement from USD12.6/bbl in 1QFY24, while implied marketing margin at INR5.9/lit beat our est. of INR5.4/lit. Refining throughput stood at 9.4mmt (vs. 10.4mmt in 1QFY24), due to the planned maintenance shutdown at its Bina refinery. The management highlighted that GRM of the Bina refinery is higher than that of other refineries since it can process up to 90% of high Sulphur crude in its crude basket. Singapore GRM has declined to USD4.1/bbl in 3QFY24 TD from USD9.8/bbl in 2QFY24, which may lead to a weak refining performance in 3Q. However, we expect GRM to improve to ~USD8.5/bbl in 4QFY24 as global refining maintenance shutdowns may lead to improvement in product cracks. Marketing sales volume (excluding exports) came in at 12.2mmt in 2QFY24 (vs. 12.8mmt in 1QFY24). The company intends to add 1,000 retail outlets in FY24 and has already added 300 retail outlets in 1HFY24.
Outlook
The stock is trading at 1.1x FY24E P/BV, and we value it at 1.1x FY25E P/BV to arrive at our TP of INR380. Maintain Neutral.
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