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Bharat Petroleum Corp.
F2Q11 Not Comparable
Quick Comment: BPCL reported its standalone F2Q11
results, registering EBITDA of Rs24.9bn and PAT of
Rs21.4bn as compared to a net loss of Rs17bn in
F1Q11. However, we believe comparison with earlier
quarters is meaningless. During this quarter the
company accounted for Rs29.5bn in government
support towards partial compensation for
under-recoveries. We also highlight that F2Q11 EBITDA
could have been higher by Rs4bn had the refining
division reported numbers in line with our expectation.
What did we like from the results?
Improving quality of balance sheet: Net debt has
decreased from Rs220bn in F2Q10 to Rs206bn during
F2Q11. Consequently, net financial income increased to
Rs2.6bn, up 66% YoY. Further, BPCL has received
government support of Rs29.5bn during this quarter, the
cash for which is expected to be disbursed later during
the year. This will further improve the quality of the
company’s balance sheet.
What we did not like?
Dismal performance in Refining Division: F2Q11
GRM of $2.8/bbl was down ~26% YoY and 21% QoQ,
and was $US1.3/bbl below our expectation of
US$4.1/bbl. In addition, opex was US$1.8/bbl for the
quarter; as a result, EBITDA for the division was at
Rs1.9bn, down 66% YoY and 60% on aQoQ basis.
Operational parameters: Refining throughput was up
12% YoY and 0.5% QoQ due to the expansion of Kochi
refinery by 2mtpa. Marketing margin, after accounting for
upstream and government support, stood at US$10/bbl
vs. negative margins of US$7.7/bbl in F1Q11.
What does this mean for our estimates? We highlight
that if we get results similar to F2Q11 for one more
quarter, our full year’s estimates will be reached.
However, we maintain our estimates at this time. We
may have to adjust our F2011e numbers based on
F2Q11 results.
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