BPCL gains over 2% after OMC returns to profitability in Q2; Jefferies maintains underperform

BPCL share price: Shares of BPCL in early trade on Monday (October 30) traded with gains of 1.81 per cent at Rs 340.55 after the oil marketing company (OMC) returned to profitability in the September quarter of the current fiscal year (Q2FY24). At the day’s high, the stock scaled to Rs 342.1, up 2.27 per cent over the previous close of Rs 334.5 per share.

The company, during the recently concluded September quarter, posted a consolidated net profit of Rs 8,244 crore versus a loss of Rs 338 crore in the same quarter a year ago. The state-run giant also clocked its highest-ever half-yearly profit of Rs 19,052 crore. The profit was largely aided by an increase in marketing margins. A freeze on petrol and diesel price revisions despite a fall in input crude oil prices helped recover losses incurred when rates were high last year.

The average GRM, or gross refining margin, at the company came in at $15.42 per barrel for the half-year ended September 30, as against $22.3 per barrel in the year-ago period.

Pre-tax earnings from the downstream oil refining business stood at Rs 11,283.29 crore in the Q2 period as against Rs 123.17 crore in the corresponding period of the previous fiscal year. 

Standalone EBITDA for Q2 FY 23-24 stood at Rs 13,679.21 crore compared to Rs 1,991.41 crore in Q2 FY 22-23.

BPCL Q2 results: What brokerages say

Global brokerage Jefferies has maintained its underperform call on the counter and has marginally slashed the target price from the earlier Rs 310 to Rs 300. The brokerage highlighted that the miss on EBITDA was due to a weaker refining margin. Further, the brokerage noted that the PSU oil refiner could see material deterioration in 2HFY24 on near-term pressure on refining margins and marketing losses on diesel.