Bharat Petroleum Corporation Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Probal Sen - ICICI Securities Limited - Analyst : Thank you very much. Thanks for the opportunity, sir. I have three questions. One in terms of the inventory impact, is it possible to quantify the inventory impact in the refining market for this quarter?

Question: Probal Sen - ICICI Securities Limited - Analyst : Understood sir. With respect to this LNG negative buffer, you mentioned the [22,000] or the losses for this quarter. Assuming that the prices stay at a similar level, is it then fair to assume that we should be building this loss every quarter for the remaining part of the year?

Question: Probal Sen - ICICI Securities Limited - Analyst : So it will increase over INR3,000 crore per quarter?

Question: Probal Sen - ICICI Securities Limited - Analyst : Okay, sir, in terms of the increase in debt that has happened. If I look at your reported, I mean the analyst information from about INR25,000 crore it's gone to about INR31,000 crore. This is purely on account of the CapEx, the losses of LPG and all will get captured in the working capital, borrowing, I would believe, right?

Question: Probal Sen - ICICI Securities Limited - Analyst : One last question if I may, with the kind of CapEx plans that we have, do we have any feed debt or peak leverage number in mind or let's say FY26 or '27 what kind of feed debt and peak leverage we are targeting.

Question: Probal Sen - ICICI Securities Limited - Analyst : Alright, sir. Thank you for this one. Appreciate it. Have a very happy Diwali and Happy New Year. Thank you.

Question: Sabri Hazarika - Emkay Global - Analyst : Yeah, good morning, sir. So firstly on your I mean GRM, so you mentioned that your inventory is not a significant impact, but there is like a lot of volatility. I mean -- I mean the cracks that have said they have fallen but not that much, but your GRM was down from $7, $8 to $4.4. So it's like still eventually or there's some other adjustments also. Because your GRM have been like much higher than your peers for the previous like few quarters. So anything specific on this?

Question: Sabri Hazarika - Emkay Global - Analyst : In this Russian discount levels have also compressed or it does remain same only?

Question: Sabri Hazarika - Emkay Global - Analyst : $2 to $3, that's the number.

Question: Sabri Hazarika - Emkay Global - Analyst : Secondly, I mean, given the petro, diesal margins now and LPG losses in on the contrary, going up. So your working capital right now will remain more or less stable or do you see this going up? I mean, short term debt and working capital.

Question: Sabri Hazarika - Emkay Global - Analyst : And one small question you mentioned, CapEx was around INR5,600 crore per H1? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 5:30AM, BPCL.NS - Q2 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Sabri Hazarika - Emkay Global - Analyst : Full year you are still like maintaining INR16,000 crore, INR17,000 crore.

Question: Sabri Hazarika - Emkay Global - Analyst : INR15,000 crore, INR16,000 crore. That year over. Okay, okay, fair enough. Thank you so much.

Question: Amit Murarka - Axis Capital Ltd. - Analyst : Hi. Thanks for the opportunity. So my first question is on CapEx. So I think you mentioned INR15,000 crore, INR16,000 crore growth this year. Next year, we will go up to INR20,000 crore then after that? Could you just at least give a broad range of how CapEx will escalate '27-'28.

Question: Amit Murarka - Axis Capital Ltd. - Analyst : Okay. But you would still fall short of your five year plan. It is INR1.5 lakh-odd?

Question: Amit Murarka - Axis Capital Ltd. - Analyst : Understood. Also a question on marketing margin like where LPG losses is understandable. But even otherwise, if you calculate the marketing margin at least seems to have dropped like auto fuel margins are very strong in Q2. So it seems margins on other products have actually dropped in the quarter. So could you just help understand that better?

Question: Amit Murarka - Axis Capital Ltd. - Analyst : Okay. Sure. And the last question from me. So, I mean, we've generally seen the product cracks have been quite weak in the last few months and LNG has gone to [$13-plus]. So even though you are, you have bottom upgradation of some of the refinery now, is it make more sense to use refinery fuel rather than LN now, with these kind of prices and lower cracks.

Question: Amit Murarka - Axis Capital Ltd. - Analyst : Yeah, sure. I understand that. But currently is it making more sense to use alternate fuels? And rather than take an engine.

Question: Amit Murarka - Axis Capital Ltd. - Analyst : Okay. That's all from my side. Thank you.

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : Thank you very much for the call. So the first thought is in terms of the potential growth for CFI '26-'27. Do you have any visibility on the capitalization of the CGD assets? How much would that be and what is the kind of upside you can expect on volumes and EBITDA per SCM and broadly in terms of profitability.

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : So in terms of the number of CNG stations in your standalone gas, can you give us a number and how do you see that you know, grow in the next two years?

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : And how many do you have now as on date which are in commercial operation?

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : Okay. So second thought is if you look at the refining business. What is your reading in terms of any potential growth levers like capacity reduction or improvement in petrol and diesel demand globally in India? So where do you see the outlook for spreads? I understand as well but in terms of the fundamentals of demand supply, is there any visibility on supply reduction through capacity rationalization? What is your take on that.

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : Okay. So one last thought on petrochemicals, how do you see the outlook for Kochi? Could see you know petrochemicals and how do you see the outlook for your inner cracker because I know margins are at multi year trough. So there there's an expectation that may not improve until CY27 or '20 according global consultants. So would that have any impact in the time of the timing of your (inaudible) petrochemical project? What is your reading on that?

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : Thank you very much, sir and wish you a happy Diwali. Thank you very much.

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Thank you, sir for the opportunity. I had a question on the auto fuel margin. They are at currently quite high level in oil price hike corrected. Would we be passing this to the consumers in the near future? Or is it sort of being held at the current level because of the lower refining margin to keep the overall margin in a healthy buffet?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : So is it primarily linked to the crude price stability or is it also linked to the lower refining margin as well?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Sure. And what would be sort of the longer term comfortable out of fuel margin that we can look at? Is it 3.5 per liter, 4.5 per liter which allows us to sort of make a sustainable margin in the system?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Yeah, last basically I think I was asking what we consider as a sort of a sustainable good fuel within auto fuel margin? Would it be in the range of INR3 to INR3.5 per liter or would we require higher?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : In terms of the new refinery plant, there has been several media articles in terms of finalizing the location and other stuff, would you be able to share more details or [contours] around this, at what stage of the collection we are in?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Would it be 100% equity owned by us or would we be also looking at some of the strategic partnerships as well on the refinery?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Last question was on the CGD side. You've mentioned that we will be doing less than the our planned allocation of INR48,000 crores. So what results into the change in the plan?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Right sir. And with the recent deallocation of the gas for the CNG, the purchase price and in that sense, the margin would have gone down for the CNG. So does that sort of alter the thinking or we think that the margin will still remain reasonable?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Thank you, sir, for all the clarifications and happy Deepawali to you.

Question: Sumeet Rohra - Smartsun Capital - Analyst : Yeah. Hi, sir. A very good morning to you and your entire team and wish you a very, very happy Diwali what (technical difficulty) thanks to you more as an investor rather than an analyst. So would be -- I would request you to be patient and please hear us out, sir. Sir, firstly, if you (technical difficulty) not see numbers have got longer ones like LPG.

Question: Sumeet Rohra - Smartsun Capital - Analyst : Thank you sir. So sir, firstly, I would like to touch upon a couple of things from a clarity point of view (technical difficulty) about INR 2,400 crores of PAT in -- we have an LPG (technical difficulty) loss of had some refraining loss, which is not quantified by management. So sir, if I understand, (technical difficulty) of course numbers would be about INR5,000 crores of profitability. Am I correct on that?

Question: Sumeet Rohra - Smartsun Capital - Analyst : And you absorbed LPG loss of INR2,100 crore. Am I right?

Question: Mayank Mistry - Morgan Stanley - Analyst : Good morning, sir. Two questions from my end. One, in terms of the Bina petrochemical expansion, can you just give us an idea of where we are in terms of FID, in terms of the equipment ordering, et cetera, as well? And the second question was more in terms of the marketing side. I think on the diesel front, I suppose, in the second quarter, specifically, we have seen your competition actually grow market share, you have been largely flat. So anything that you're doing on that? And to your earlier comment in terms of, on the CNG side, you are seeing slower growth in, I think the metros and the Tier 1 cities versus rural? Can you just talk to us about what's going on those? Thank you.

Question: Sumeet Rohra - Smartsun Capital - Analyst : Sorry about that (technical difficulty) disconnected. So coming back to my point. So you said that you reported a INR2,400 crore profit (technical difficulty) or marketing loss. So effectively, our own number is about INR5,000 crores. Am I right, sir?

Question: Sumeet Rohra - Smartsun Capital - Analyst : So now my second point is that on the LPG point of view, now since it is a regulated product and controlled by the government, and it's mentioning the buffer account. So sir, what is the, I mean the communication of the dialogue you're having with the government? Because clearly, one thing there is everything that today all marketing companies (inaudible) the pioneer is not being valued the way it's to potential is? I mean, come to think of it, right? I mean if you (technical difficulty) could in use, our fuel outlets on a basis, but the way this company has been valued is stark contrast to what its potential is. So clarity on the LPG point of view with the government would not only (technical difficulty) but given visibility. And overall, it would lead to value creation for all stakeholders, right? So if you can pursue this with the government, then get them to figure it out that ultimately, clarity on this is basically the withholding step on building value because we are a consumer company, sir. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 5:30AM, BPCL.NS - Q2 2025 Bharat Petroleum Corporation Ltd Earnings Call Today, which consumer company in India makes INR5,000 crores of profit on a quarterly basis? And in spite of that, you see the market cap where it is. So if you can pursue this matter very strongly, it would be very, very beneficial for all stakeholders, with the government of India being the primary owner of this company. So that's something, sir, if you can look after, it would be best for all stakeholders. Secondly, sir, there was a recent development on some news, basically, which the wire was sticking out Saudi Aramco and (inaudible). Sir, today, I mean, it's a matter of prestige and honor for us to partner with such a big giant. So sir, these things should be outwardly spoken about, right? Because even today, Deepam also clearly says that all PSUs should build market cap and value. And clearly, sir, such news has not been spoken about. It's absolutely eye popping that if you buy up with a company like Saudi Aramco, it is a matter of honor and prestige. So if you can please share some insight and more into this of what we are planning to do exactly, et cetera, et cetera, it will benefit everybody. And sir, lastly, I mean I wanted to understand is that what are the steps we are taking for building shareholder value because, I mean, I get to understand that when Deepam was also on road for the PSUs, they always say that rate is given to market cap creation. And today, what are the steps that we are taking for building market caps, sir?

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : Yes. So if you're looking at your capitalization schedule in terms of your CapEx, how much should we assume you will capitalize and your gross block this year and over the next two years to the (inaudible) impact on depreciation? And to what extent will you be able to generate the return on capital employed over the next two years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 5:30AM, BPCL.NS - Q2 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : No. How would the capitalization CGD in the stand-alone entity, Wouldn't that add to your?

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : So on this capitalization in CGD, when do you think you'll be able to get normalized return maybe 12%, 15%.

Question: S. Ramesh - Nirmal Bang Institutional Equities - Analyst : Okay, sir. Thank you very much.

Question: Yogesh Patil - Dolat Capital - Analyst : Thanks for taking my question. Sir, question is related to Mozambique asset. What is the update of the project status of Mozambique LNG project? That's one. Secondly, how much amount we have invested in this project? And as part, lastly, as you have mentioned the CapEx plan for the next two to three years so when that included to Mozambique, commitments are include in the it or on the? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 5:30AM, BPCL.NS - Q2 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Yogesh Patil - Dolat Capital - Analyst : Is that already considered into the next upcoming CapEx plans of the next (inaudible) year? That is a part?

Question: Yogesh Patil - Dolat Capital - Analyst : Okay. And if there is a further delay in the Mozambique investment or projects, then our CapEx can come down by that amount?

Question: Yogesh Patil - Dolat Capital - Analyst : Okay. Sir, lastly, sir, considering the current tracks on the middle distillate you will see on the petrol land diesel, can we assume that (inaudible) will rebound more than (inaudible) per barrel in Q3, Q4 or more than that? Any (inaudible) ?

Question: Yogesh Patil - Dolat Capital - Analyst : Okay, thank, thanks a lot, sir, and wish you a happy Diwali. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 5:30AM, BPCL.NS - Q2 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Varatharajan Sivasankaran - Antique Stock broking Ltd - Analyst : Thanks. I had a couple of questions or points. One is about this market share variation we have seen this time around, we have had a market share gain. Is the source of the market share gain entirely the retail network expansion? Or is there any other reason why we have had improvement in the share?

Question: Varatharajan Sivasankaran - Antique Stock broking Ltd - Analyst : And then the three different in a position now to see a quarter-to-quarter basis earnings and profitability subject? Or do you think it's still too early?

Question: Varatharajan Sivasankaran - Antique Stock broking Ltd - Analyst : When you spoke about the number of outlets you said 500, 600-odd outlets. That includes the outlets which we have given to the CGU to operate as well as (inaudible)

Question: Varatharajan Sivasankaran - Antique Stock broking Ltd - Analyst : These are our own, okay? That is a pretty large number on a stand-alone basis, yes. Fair enough. Yes. Sure. Thanks a lot to all the participants for taking out time to join the call. I (inaudible) in the BPCL management for giving detailed explanation as to the entire question and answer as related (inaudible) and the plans as well. Thanks, everyone, and have (inaudible)and have a great day.