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GRM at US$ 6/bbl, better than expected

News: BPCL’s topline was up 13.3% QoQ to Rs.101631.7 crore in Q2FY22. Marketing sales were at 9.9 MMT, up 2.9% QoQ. Crude throughput was 7.2 MMT, up 4.7% QoQ while reported GRM was at US$ 6/bbl. Employee costs were lower than estimated at Rs.769.4 crore. Subsequently, EBITDA stood at Rs.4477.7 crore, up 37.7% QoQ leading to PAT of Rs.2694.1 crore, up 79.4% QoQ.

Views: BPCL's performance was better than expected on account of refining segment while marketing performance was broadly in line with estimate. With recovery in product cracks in current quarter, GRMs sustaining at higher level will be the key. We expect better GRMs in coming quarters on the back of commissioning of additional petchem capacity and continued rebound in product cracks. Improvement in GRMs and further recovery in fuel demand (mainly Diesel) will lead to better performance. Divestment process and its timeline will be the key determinant for stock performance in near term.