BPCL Q4 Results Review: Refining Margins, Inventory Gains A Positive, But LPG Woes Persist, Say Analysts
Bharat Petroleum Corp. posted a 31% sequential decline in its net profit for the quarter ended March 31, 2025, at Rs 3,214 crore. Despite the decline, it has surpassed the consensus estimate of Rs 2,525.4 crore of the analysts tracked by Bloomberg. According to brokerages, this beat was led by a refining and inventory-related marketing gains.
Both Jefferies and Citi maintained a 'buy' rating on the stock, citing strong fundamentals and room for re-rating. Jefferies raised its target price to Rs 370 from Rs 330, while Citi continues to value it higher at Rs 390.
Refining Performance Strong
BPCL's fourth quarter Ebitda was at Rs 7,765 crore, significantly ahead of estimates. Jefferies highlighted that the Gross Refining Margin rose to $9.2/bbl, well above the Singapore benchmark, aided by inventory gains.
Citi attributed the GRM improvement to post-maintenance normalisation at the Mumbai and Kochi refineries, along with an 11% sequential rise in crude throughput to 10.6 MMT.
Marketing Buoyed by Inventory Gains
Both brokerages noted that while core marketing margins remained stable, reported profitability was inflated due to inventory gains. Citi reported gains of Rs 520 crore in the fourth quarter, compared to losses in the prior quarter. Jefferies expects some normalisation as inventory losses may return in the first quarter of fiscal 2026, especially with crude prices falling below $75/bbl.
LPG Compensation Absent
A key disappointment was the continued absence of LPG under-recovery compensation. Citi estimated that BPCL's financial year 2025 Ebitda would have been 40% higher, at Rs 36,000 crore, had compensation been received. Despite earlier government indications that increased excise duties on fuel would fund this, no disbursements occurred. Fiscal 2025 LPG under-recoveries totalled Rs 10,500 crore.
Capex And Debt On Rise
Jefferies noted a 59% year-on-year rise in capex to Rs 14,000 crore, with a focus on upstream and renewables. Gross debt rose 24% year-on-year to Rs 23,300 crore, according to Citi. While this reflects BPCL's strategic investment push, it adds near-term pressure to the balance sheet.
Both brokerages remain optimistic. Jefferies forecasts financial year 2026 earnings growth of 17–18% on strong refining and improved marketing margins. Citi expects first quarter of this fiscal to benefit from robust auto fuel margins and a recent Rs 50/cylinder LPG price hike, which may help reduce under-recoveries.
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