Top Indian Companies: Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited (BPCL) is an Indian government-owned oil and gas corporation.

It is under the ownership of Ministry of Petroleum and Natural Gas, Government of India, headquartered in Mumbai, Maharashtra. It operates two large refineries in Kochi and Mumbai.

The company today known as BPCL started off as Rangoon Oil and Exploration company set up to explore the new discoveries off Assam and Burma during the British colonial rule of India. In 1889 during vast industrial development, an important player in the South Asian market was the Burmah Oil Company. BPCL is Nifty 50 company with a weightage of 0.48% on the index.

Operations

Bharat Petroleum operates the following refineries:

• Mumbai Refinery : Located near Mumbai, Maharashtra. It has a capacity of 13 million metric tonnes per annum.

• Kochi Refinery : Located near Kochi, Kerala. It has a capacity of 15.5 million metric tonnes per annum.

• Bina Refinery : Located near Bina, Sagar district, Madhya Pradesh. It has a capacity of 7.8 million metric tonnes per year. This refinery started as Bharat Oman Refineries Limited (BORL), a joint venture between Bharat Petroleum and OQ (formerly known as Oman Oil Company).

Subsidiaries

Indraprastha Gas Limited (IGL), a joint venture between Gas Authority of India Limited (GAIL), Bharat Petroleum Corporation Limited (BPCL) and the Government of Delhi to operate the Delhi City Gas Distribution Project.

Petronet LNG, a joint venture company promoted by the Gas Authority of India Limited (GAIL), Oil and Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOC) and Bharat Petroleum Corporation Limited (BPCL) to import LNG and set up LNG terminals in the country.

Bharat Renewable Energy Limited, a joint venture company promoted by BPCL with Nandan Cleantech Limited (Nandan Biomatrix Limited), Hyderabad and Shapoorji Pallonji Group, through their affiliate, S.P. Agri Management Services Pvt.Ltd. specializes in offering Bio diesel plants, ethanol, bio-diesel plants, Karanj (Millettia pinnata), Jatropha and Pongamia (Pongamia Pinnata) plantation services, renewable generation services etc.

Ownership

As of September 2018, 54% of the shares of BPCL were owned by the Government of India (through the President of India), with the rest owned by Foreign Portfolio Investors (17%), BPCL trust for investing in shares (9%), Mutual funds and UTI (7.5%), Insurance companies (6%) and the balance held by individual share holders.

Shareholding Pattern

The Shareholding Pattern page of Bharat Petroleum Corporation Ltd. presents the Promoter's holding, FII's holding, DII's Holding, and Share holding by general public etc.

Shareholding Pattern - Bharat Petroleum Corporation Ltd.

Holder's Name No of Shares % Share Holding

No 0f Shares 2169252744 100%

Promoters 1149183592 52.98%

Foreign Institutions 274710504 12.66%

Banks Mutua lFunds 295958713 13.64%

Central Govt 18666666 0.86%

Others 57389611 2.65%

General Public 203946202 9.4%

Financial Institutions 162560508 7.49%

GDR 6836948 0.32%

FY2023 Q4 and Full Year Results

BPCL on Monday said its net profit more than doubled in the March quarter on the back of a recovery in fuel marketing margins and better refining margins.

The company's standalone net profit at Rs 6,478 crore in the January-March quarter compares to Rs 2,501 crore in the same period a year back, according to a company's stock exchange filing.

The jump in fourth-quarter net profit helped the company post Rs 1,870.10 crore of net profit for the full fiscal year 2022-23 (April 2022 to March 2023) by negating the losses the firm had to suffer in the first half of the financial year from holding petrol, diesel and LPG prices despite a surge in cost.

BPCL and other state-owned fuel retailers continue to hold prices but a fall in international oil prices has meant that they are now making healthy margins.

Petrol and diesel prices have been on a freeze since April 6 last year. The basket of crude oil that India imports was over USD 100 per barrel in April last year and is now less than USD 75.

Crude oil is processed in refineries such as ones owned by BPCL into fuel.

While the prices have fallen, the three state-owned firms continue to hold rates to recoup losses suffered in the first half of the fiscal year.

Brokerage Outlook

Auto fuel gross margin has corrected to Rs 2.2/lt from ~Rs 5/lt in Sep’21, as crude price has been inching up. The impact of higher Crude should be passed on gradually and we expect auto fuel margin to average Rs/lt 3.25/ 3.0/ 3.0 in FY22/ 23/ 24.

It averaged Rs/lt 5.1/ 4.0/ 3.3 in FY21/20/19. Higher Crude price has historically resulted in inventory gains which should support near term earnings. Brokerage Axis Capital estimate 10% CAGR in EBITDA over FY22-24.

Disinvestment remains a key rerating trigger; ADD

Brokerage, Axis Capital value BPCL on SoTP – Sep’23E EV/EBITDA of 6x for refining and 7x for fuel marketing. Brokerage also add the value of listed investments (IGL, PLNG) at 10% discount to market price. While the divestment process is moving slowly, any progress could lead to stock rerating. Stock trades at 1.4x P/B (in line with LT mean) and 9.7x P/E (in line with LT mean) in FY23E.

Maintain ADD Divestment process is going slow and any progress could drive stock rerating. SoTP-based TP at Rs 435 (vs Rs 460 earlier).

ESG

Being an essential commodity and service provider, BPCL acknowledges the role it plays in ensuring environmental sustainability. BPCL is in a continuous process of looking at alternate sources of energy production by adopting various methods to reduce energy consumption e.g implementation of Solar, Wind Energy, Energy Efficient lights and energy efficient technologies.

To moderate the effect of its operations, BPCL strives to create opportunities to decrease emissions by embracing energy efficient Operations. Carbon dioxide, NOx, SOx, Methane and different gases significantly make up emissions from BPCL’s operations.