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BPCL
In the red in 1Q; outlook
better from 2Q
„1Q in the red, as R&M had to bear 32% of subsidy; Neutral
Bharat Petroleum (BPCL) was in the red in 1Q FY12, with a loss of Rs25.6bn.
In 1Q, BPCL had to bear 32.6% of the subsidy with the upstream (33%) and
government (34.3%) contributing only 68%. In the last 3 years (FY09-FY11), R&M
companies like BPCL had borne 0-12% of the subsidy. We are assuming that
they will bear 8% of FY12 subsidy. R&M companies also had to bear the entire
subsidy on petrol in 1Q. We expect 2Q subsidy to be 45% lower than in 1Q, due
to the fuel price hike and tax cuts at the end of 1Q. There is also unlikely to be
any subsidy on petrol from 2Q. The earnings outlook is, thus, likely to be better
from 2Q. HPCL (XHTPF, Rs383.95, Buy), which is trading at just 1x FY12 NAV
vis-à-vis 1.5x for BPCL, is our top pick among R&M companies. We retain our
Neutral on BPCL.
Refining margin down 15% YoY, but inventory gain up 157%
BPCL’s 1Q loss rose 49% YoY, to Rs25.6bn, as its subsidy (including petrol) net
of compensation is up Rs9bn YoY. Also, BPCL’s 1Q FY12 GRM was 15% YoY
lower, at US$3.0/bbl, vis-à-vis US$3.6/bbl in 1Q FY11. Crude throughput, at
5.2mmt, was also 7% YoY lower. However, BPCL reported a 157% YoY higher
inventory gain, at Rs12.1bn in 1Q FY12 vis-à-vis Rs4.7bn in 1Q FY11.
Outlook much better from 2Q; FY12 EPS kept unchanged
We are assuming that BPCL will have to bear 8% of FY12 subsidy, whereas they
had to bear 32.6% of 1Q subsidy. BPCL’s 1Q FY12 loss would have been just
Rs0.4bn (98% lower) if they had to bear 8% of the 1Q subsidy. Subsidy will be
much lower in 2Q, due to gains from the cut in subsidy at the end of 1Q. The
earnings outlook from 2Q is, thus, likely to be much better. We have kept BPCL’s
FY12 EPS forecast unchanged at Rs54.4 (1% YoY decline).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BPCL
In the red in 1Q; outlook
better from 2Q
„1Q in the red, as R&M had to bear 32% of subsidy; Neutral
Bharat Petroleum (BPCL) was in the red in 1Q FY12, with a loss of Rs25.6bn.
In 1Q, BPCL had to bear 32.6% of the subsidy with the upstream (33%) and
government (34.3%) contributing only 68%. In the last 3 years (FY09-FY11), R&M
companies like BPCL had borne 0-12% of the subsidy. We are assuming that
they will bear 8% of FY12 subsidy. R&M companies also had to bear the entire
subsidy on petrol in 1Q. We expect 2Q subsidy to be 45% lower than in 1Q, due
to the fuel price hike and tax cuts at the end of 1Q. There is also unlikely to be
any subsidy on petrol from 2Q. The earnings outlook is, thus, likely to be better
from 2Q. HPCL (XHTPF, Rs383.95, Buy), which is trading at just 1x FY12 NAV
vis-à-vis 1.5x for BPCL, is our top pick among R&M companies. We retain our
Neutral on BPCL.
Refining margin down 15% YoY, but inventory gain up 157%
BPCL’s 1Q loss rose 49% YoY, to Rs25.6bn, as its subsidy (including petrol) net
of compensation is up Rs9bn YoY. Also, BPCL’s 1Q FY12 GRM was 15% YoY
lower, at US$3.0/bbl, vis-à-vis US$3.6/bbl in 1Q FY11. Crude throughput, at
5.2mmt, was also 7% YoY lower. However, BPCL reported a 157% YoY higher
inventory gain, at Rs12.1bn in 1Q FY12 vis-à-vis Rs4.7bn in 1Q FY11.
Outlook much better from 2Q; FY12 EPS kept unchanged
We are assuming that BPCL will have to bear 8% of FY12 subsidy, whereas they
had to bear 32.6% of 1Q subsidy. BPCL’s 1Q FY12 loss would have been just
Rs0.4bn (98% lower) if they had to bear 8% of the 1Q subsidy. Subsidy will be
much lower in 2Q, due to gains from the cut in subsidy at the end of 1Q. The
earnings outlook from 2Q is, thus, likely to be much better. We have kept BPCL’s
FY12 EPS forecast unchanged at Rs54.4 (1% YoY decline).
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