BPCL Q3 Earnings Review: Not As Good As Expected, But Outlook Positive, Say Brokerages

Bharat Petroleum Corporation Ltd. (BPCL) has reported its Q3 FY25 earnings, with results that fell short of analysts' expectations. Despite an overall positive trajectory in certain sectors, the company's refining and marketing performance were weaker than anticipated. Both Jefferies and Citi Research provided insights into BPCL’s results, offering slightly varied but optimistic outlook for the future.

Jefferies noted that BPCL’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (Ebitda) for Q3 FY25 stood at Rs 7,600 crore, an year-on-year increase but a miss of 26% against the brokerage's estimate and 10% below consensus. The lower-than-expected refining performance, impacted by weaker gross refining margins (GRM) and narrower premiums against regional benchmarks, was the primary factor behind the shortfall. Refining throughput also showed a 7% quarter-on-quarter decline.

However, Jefferies maintains a positive view on the company, stating that the outlook for refining in 2025 remains better, citing the ongoing global refinery closures that are expected to outpace demand growth. The report highlights that BPCL’s marketing margins moderated but remained above normalised levels. There is optimism about the company's ability to manage LPG losses, depending on potential government support for under-recoveries. Jefferies raised FY25 earnings estimates, factoring in the elevated marketing margin run-rate, and reiterated a Buy recommendation with a revised target price of Rs 370, down from Rs 410 earlier.

Citi Research also expressed cautious optimism, acknowledging that BPCL’s 3Q earnings were lower than expected. Citi noted that the Ebitda figure was in line with consensus but still below their forecast of Rs 10,200 crore.

The discrepancy was attributed to a combination of planned refinery shutdowns, inventory losses, and widening LPG under-recoveries.

Despite these challenges, Citi maintained its Buy rating, highlighting that the company’s net income growth of 37% year-on-year and the 94% quarter-on-quarter increase were positive indicators. Citi believes BPCL’s outlook remains positive, citing the company’s efforts to manage inventory losses and expecting possible compensation for LPG under-recoveries. The brokerage has a target price of Rs 390, considering the stock's attractive valuations and improving marketing profitability.

For Q3 FY25, BPCL reported a 10.1% increase in revenue to Rs 1.13 lakh crore, compared to Rs 1.02 lakh crore in the previous quarter. The company’s Ebitda surged by 68% to Rs 7,580 crore, up from Rs 4,512 crore, with a margin improvement to 6.7% from 4.4%. Net profit saw a sharp rise of 93.9%, reaching Rs 4,649 crore, compared to Rs 2,397 crore in Q2 FY25.