Bharat Petroleum Corporation Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Bharat Petroleum Corporation Limited (BPCL) Q2 FY24 Earnings Concall

• Financial Performance
  • BPCL achieved highest ever profit after tax for half year at INR19,052 crores.
  • Negative LPG buffer of about INR849 crores fully recovered, current buffer is positive.
  • Capex target is INR10,000 crores for FY24, achieved INR5,191 crores in H1.
  • Gross borrowings reduced by 5,000 crores quarter-on-quarter to INR22,568 crores on 30 Sept.
  • Net debt close to zero on a standalone basis, but expected to increase going forward with new projects.
  • Strong profitability with 25% ROE.
• Refinery Operations Update
  • Refineries maintained stellar performance on physical and financial parameters.
  • Throughput at 9.35 MMT in Q2 at 105% capacity despite shutdown at Bina Refinery.
  • Distillate yield at 84.06%.
  • High sulfur crude processing 75% vs. 73% last year.
  • Kochi Refinery processed 2 new crude grades, total basket now at 108 grades.
• Gas Business Update
  • 25 GAs under construction, crossed MWP pipeline target of 8488 km (achieved 16,815 km).
  • 452 CNG stations completed against MWP of 119 stations.
  • Commercial sales started in 24 GAs, aim to add 500 more CNG facilities.
• Bina Refinery Performance
  • Can process high-sulfur crude grades up to 90-95% which helps improve GRM.
  • Product slate flexible – can produce up to 57% diesel which has seen high cracks recently.
  • Higher intake of competitively priced Russian crude at Bina refinery improves GRM.
• Capital Allocation and Petrochemical Plans
  • INR5 lakh crore capital outlay planned over next 5 years.
  • Focus areas – refining, petrochemicals, E&P, marketing infrastructure, pipelines, city gas.
  • Additional capex needed to meet 2040 net zero target.
  • No overlap with Petronet’s PDH project as BPCL planning polypropylene, HDPE, LDPE units.
  • Integration with BINA refinery to provide feedstock advantage.
  • Bina peak capex from FY24-25 onwards; overall capex to jump from FY23 with peak in FY27-28.
  • Cash flows will lag capex, so will need to take on debt, but plan to maintain reasonable leverage.
• Refining Margins and Inventory Gains
  • Refining cracks and margins continued to remain strong in Q2.
  • Expect moderation in gasoline cracks going forward, but overall cracks still remain healthy.
  • INR1,497 crores inventory gain recognized due to favorable crude and product price movements during the quarter.
• Project Updates
  • Mozambique LNG project still under force majeure, no change in status.
  • Awaiting clarity in the next few quarters on provisional project cost and lifting force majeure.
  • INR18,000 crore rights issue awaiting regulatory approvals, plan for investment already submitted.
  • Russia crude intake steady at 30-40% of overall crude throughput in Q2.
• Carbon Emissions Reduction Plans
  • Target for net zero emissions by 2040.
  • Allocated INR12,000 crores of capex for renewable and carbon mitigation projects.
  • Will require total investments of INR95,000 – 1 lakh crores for carbon neutrality.