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.