Bharat Petroleum Corporation Ltd Q3 2025 Earnings Call Transcript

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

Question: Probal Sen - ICICI Securities Limited - Analyst : I have three questions. One, with respect to the Russian crude part of our sourcing portfolio with all that is going on in terms of the sanctions, what is the mitigation strategy we have in place in terms of securing supplies in case Russian crude is disrupted? How much was it as a percentage of our sourcing in nine months FY25? And assuming that the discount on crude will no longer be there, what is the kind of impact on crude cost effectively? That's my first question.

Question: Probal Sen - ICICI Securities Limited - Analyst : Understood, sir. So is it fair to say that at 30% with the benefit of $3, that's around a $0.90 impact on the overall crude cost on a blended basis that we have to sort of live with in the absence of Russian crude.

Question: Probal Sen - ICICI Securities Limited - Analyst : Right. Sir, secondly, on the CapEx project, you mentioned the Bina Petrochemical and the greenfield refinery in Andhra Pradesh. I just wanted a little bit more granularity in terms of the petrochemical slate of Bina. What is the time line we are looking at? What is the investment done till date? And what is the overall investment for Bina, if I can get some sense?

Question: Probal Sen - ICICI Securities Limited - Analyst : Sir, in terms of phasing, the bulk of the CapEx will happen maybe starting FY26 or '27?

Question: Probal Sen - ICICI Securities Limited - Analyst : So FY27 is when we will see the bulk of the cases -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Probal Sen - ICICI Securities Limited - Analyst : And sir, in terms of the yield from the additional refining capacity, you said 3 million ton of capacity in refining and 3 million ton of petrochemical capacity. Is that correct?

Question: Probal Sen - ICICI Securities Limited - Analyst : So 7.8 million metric ton to the complex capacity will be 11 million metric ton out of which around 3 million metric ton would be essentially petrochemical output, Is that the understanding?

Question: Probal Sen - ICICI Securities Limited - Analyst : Okay. One last question, sir, a housekeeping one. This quarter saw a sudden jump in terms of the staff cost. Can we just get a sense of what happened in terms of -- because the quarterly run rate was INR7 billion, INR7.5 billion. This quarter, we've seen INR1,200 crores plus in staff costs.

Question: Probal Sen - ICICI Securities Limited - Analyst : And how much was that, sir, was it about INR400 crores, INR500 crores, entire difference?

Question: Probal Sen - ICICI Securities Limited - Analyst : Around INR370 crores.

Question: Kirtan Mehta - Baroda BNP Paribas Mutual Funds - Analyst : I wanted to understand about the BPRL loan repayment, which is due this year. We have around INR8,300 crores of repayment due. What's our plan? Are we planning to roll over this loan? Or are we planning to pay this? And how are we going to arrange the funds for the same in BPRL?

Question: Kirtan Mehta - Baroda BNP Paribas Mutual Funds - Analyst : Sure. And in terms of the Mozambique assets, would you also sort of run us through the time outlook in terms of the restart?

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Recently, we saw that you won a tender to supply re-power to NTPC. Just trying to understand what is the business model that you are envisaging in renewable energy? Initially, we thought that it was decarbonization of your own operations, but now it seems that you are pursuing projects where you will supply externally as well. Also, could you help us understand whether you will reach the 2 gigawatt target for renewable capacity setup by FY26? Currently, you would be much less than that, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Okay. Just to understand the targets that you have outlined, the long-term targets for renewable capacity, this would include all three combined, right?

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Okay. And would you be able to comment on the CapEx outlay for FY26 and '27 for the renewable aspirations you have?

Question: Yogesh Patil - Dolat Capital Market Pvt Ltd. - Analyst : Sir, our reported GRM of $5.6 per barrel was hardly $0.6 per barrel premium to Singapore benchmark. So apart from refinery shutdowns in Mumbai and the Kochi side, is there anything which impacted the BPCL reported GRM? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Yogesh Patil - Dolat Capital Market Pvt Ltd. - Analyst : Our marketing inventory losses were closer to INR722 crores. Any particular reason? And I just wanted to know how many days of product inventory do we maintain on a general basis?

Question: Yogesh Patil - Dolat Capital Market Pvt Ltd. - Analyst : Sir, one more. Do we have any long-term contracts with the Russian crude supplier? And if we -- if you could provide some details on the crude sourcing side, for the calendar CY '25, how much long-term crude sourcing we have and how much is short term? That would be really helpful.

Question: Yogesh Patil - Dolat Capital Market Pvt Ltd. - Analyst : Sir, last question. Sir, considering very weak GRM as of now $1 per barrel or even less than that, if the situation continues for a month again and on the top of that, we have to procure spot crude a little bit costlier, let's say $2, $3 per barrel premium. So don't you think this will get a little bit negativity on the refining profitability at least in the near to medium term? Please correct me if I'm wrong.

Question: Yogesh Patil - Dolat Capital Market Pvt Ltd. - Analyst : And sir, do you think in the long run, will you get Russian crude supplies at a discounted rate after six months, 12 months down the line? What is your in-house assessment on this sir.

Question: Iqbal Khan - ICICI Prudential Life Insurance Company Limited - Analyst : Sir, just on the Russian discount, like you said in Q3, it was around $3, $3.5. And of lately, I've been reading a couple of news that Russian discount or Russian prices have fallen down. So I mean -- and you said for the month of Jan and Feb, we are going to source with Russian crude. So are we enjoying this -- I mean, I believe the Russian discount would have increased. So are we enjoying this benefit for these two months? Or I mean, can you just throw a light on what is the current discount? And are we availing the benefit of this fall in Russian crude of lately?

Question: Amit Murarka - Axis Capital Limited - Analyst : So my question is again on the CapEx side. So you said that on Bina expansion, most of the CapEx will start in '26 and '27. Are you providing any absolute guidance for '26 as well as '27 now?

Question: Amit Murarka - Axis Capital Limited - Analyst : Okay. And then '27, could it like go up to maybe INR25,000-odd crores?

Question: Amit Murarka - Axis Capital Limited - Analyst :

Question: Amit Murarka - Axis Capital Limited - Analyst : So then that is still on, right? I mean, so in that case, you're saying that '28, '29 could maybe go up to a much higher number than to meet that?

Question: Amit Murarka - Axis Capital Limited - Analyst : Sure. And on the GRM, you mentioned that the GRMs were a bit weaker because of shutdown and lower Russian crude sourcing. Was there some inventory loss as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Amit Murarka - Axis Capital Limited - Analyst : Understood. And just the last question on the fuels. So the marketing volumes generally, I think, have been growing lesser than the industry growth, I believe, because of some gains by private refiners, private marketing companies. So recently, there was some article as well that those refining companies -- those outlets who are getting impacted are basically demanding better margins since the volumes are going down. So is there any discussion going on, on that front to raise dealer margins?

Question: Sumeet Rohra - Smartsun Capital - Analyst : So sir, firstly, I mean, I would like to talk to you as an investor. Sir, I clearly see that you have done exceptionally well. You have made a profit of INR10,000 crores after absorbing INR7,100 crores of LPG under recovery. Now sir, it is -- of course, we all know that LPG -- we also understand, sir, that LPG under recovery is borne by the government. But sir, clearly, I mean, one thing which you clearly must appreciate from our point of view, is that this LPG under recovery is basically clouding the earnings overall for the earnings outlook or the earnings visibility basically for investors for us. I mean, sir, I would just like to highlight to you a few important things, which I really think are very important from an investor angle because, I mean, we spend a lot of time on metrics, on GRMs on -- but the thing is that these things need to be priced by market, right, which clearly is not being priced. Now sir, I just -- I would like to highlight this to you that today, the market cap -- I mean, the price of Bharat Petroleum or whatever you may say the market cap is exactly what it was back in 2017. Now sir, back in 2017, we used to make about INR9,000 crores of profit. But today, sir, we are well making INR20,000 crores of profit. So clearly, when public sector enterprises in India are going through a massive re-rating, okay, companies like ours, which are the highest quality companies in terms of ROEs and ROICs are getting derated. Now sir, I mean, it is something of -- for which you should take significant importance is that today, we make INR20,000 crores and tomorrow with project Aspire, we make INR30,000 crores. But if the market doesn't get confidence on earnings and visibility, then how does it help an investor, right? I mean, because today, ultimately, investors also want to make return. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call And today, if you see that if markets are not going to value earnings and we are going to trade at seven-, eight-year kind of low prices, it is clearly saying that there is a disconnect between the reality of what you're doing versus the perception, right? I mean it clearly goes to show, right, because on ground level, you are delivering superb results. And there is no question on that front, right? But obviously, sir, the market needs to take

Question: Sabri Hazarika - Emkay Global Financial Services Ltd - Analyst : So I have a few questions. The first one is basically in the current scenario, if I assume that diesel cracks remain at, say, around $11, $12 and petrol, say, let's assume around $5, $6 and assuming that Russian crude share goes down to, say, around 10%, 15% with possibly no discount. Then based on your configuration, what kind of GRMs your company can report?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd - Analyst : So around $6 to $7 GRM at $13, $14 diesel cracks is something which can be expected?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd - Analyst : Right, sir. Second is basically on your -- this CapEx plan. So what is the peak debt that you envisage, which you find comfortable for the company once you are like at the peak of the CapEx cycle?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd - Analyst : Onetime debt equity will be the peak levels that you have -- okay, fine. And lastly, on this LPG thing only, so right now, I mean, Q4, I think there has been some reversals. We have seen oil prices go up, LPG prices also seasonally have been up. So in near term, do you have any -- and on top of that, the excise duty payments and all -- which also comes at the end of the year. So are you comfortable in terms of working capital or there could be a spurt in short-term debt and all?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd - Analyst : Got it, sir. Sir, just a small bookkeeping question. Your ATF volumes seems to have declined YoY. So anything specific on this?

Question: Nitin Tiwari - PhillipCapital (India) Private Limited - Analyst : My question is related to the Andhra refinery, if you can throw some more light in terms of what is the estimated size of this project and what is the total CapEx? And you mentioned something around INR6,000 crores that you've allocated, what is that for? And basically, what is the incremental CapEx and timeline we are looking at in this project? So that would be the first one.

Question: Nitin Tiwari - PhillipCapital (India) Private Limited - Analyst : Sure, sir. Sorry, I missed on the total investment number that you mentioned.

Question: Nitin Tiwari - PhillipCapital (India) Private Limited - Analyst : INR95,000 crores. All right. And sir, the location is confirmed or you're yet to decide on the location? And is it going to be a coastal refinery or inland refinery?

Question: Nitin Tiwari - PhillipCapital (India) Private Limited - Analyst : Understood, sir. Sir, my second question is related to a news item which was published around, I mean, excise duty exemption that Supreme Court has given to you for MoU sales of product between the oil marketing companies. So if you can just elaborate a little bit on that? And would that in any way be accretive on the margin side for us?

Question: Nitin Tiwari - PhillipCapital (India) Private Limited - Analyst : Yes, I suppose that is the one. There was this news item which said that I think it was related to the sales which happens between the oil marketing companies on -- yes.

Question: Nitin Tiwari - PhillipCapital (India) Private Limited - Analyst : Okay, sir. Because I think the news item mentioned something like that, that excise would be exempted on this sale and purchase. And therefore, I thought like if there's any benefit accruing to us because of that exemption.

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : A few questions. Sir, first thing is on the Russian crude source. So you did mention M minus 2. So for January, you would have booked by, say, November. Average price, the discount, that's how it will work? Or it will be a November price less discount?

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Understood, sir. Sir, second question on the crude sourcing. So what would be on a blended basis a non-Russian crude sourcing cost on a premium? What is the premium Russian crude that we will be paying?

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Understood, sir. I was just trying to understand for the same quality of crude that we have to replace the Russian crude via the other crudes. So would it be like in the current prevailing rates, whether it will be on par to Brent or we have to pay a premium to Brent. I just want to understand.

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst :

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : So we have a one-year volume offtake agreement and then every year.

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Got it, sir. Sir, also on this AP Andhra Pradesh refinery, so how do we -- how are we generally looking at it? So once we are almost close to completion of Bina, we will start work on this. How are we just trying to understand the CapEx cycle.

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Okay, sir. Sir, also, Bina, the petchem, can you give the product slates of the 3 million ton output. Can you give a rough cut? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Okay. Sir, also for FY26, you kind of roughly set around INR19,000 crores of CapEx. Any split that you can give on this number across segments?

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Okay, sir. Sir, also the LPG under recovery number that we are reporting includes the normal marketing margin that we would have made that is also considered as part of under recovery or that is over and above.

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Okay. Sir, also on the CGD performance, can you give any update in terms of what is the current volumes like? And also any thoughts on given that the recent gas allocation cuts. So anything changes for us in terms of how we are looking at it in terms of investments in this part of the business?

Question: Somaiah V - Avendus Spark Institutional Equities - Analyst : Yes, it did sir.

Question: Vikash Jain - CLSA - Analyst : I have just one on this Russian discount, you're talking of a number like $3 a barrel. I'm sure this is mandate to us in India. How has this number changed over the last few months or say, through this calendar year? What was the broad range that it has moved at.

Question: Vikash Jain - CLSA - Analyst : Sir, just for the sake of clarification and confirmation, this is when you negotiate with them, this is the discount that you negotiate for and this is for crude that they will deliver to India. We obviously do not take any responsibility on shipping insurance, et cetera, et cetera, right?

Question: Vikash Jain - CLSA - Analyst : Okay. And sir, when you come to the point of maybe your guess that it will fall from 30% of slate to 20%, is that because roughly if we look at the fleet that has become more challenging for them to use. That is somewhere around 20%, 25% of the fleet that if I remember the numbers correctly. So is that how you're guessing? Or that's just a kind of a very guesstimate number that you're saying that it can fall from 30% to 20% or something?

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : So if you look at the CGD business, my calculation shows that you're doing about 3.5 million kgs per day. Is that correct on this 96 TMT you have

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : So if you look at the peaking of the CapEx in the CNG business in your stand-alone GA, how do you see the CapEx in FY26, '27 and '28?

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : So when you say you are expecting EBITDA positive in FY26, so on the current infrastructure and the addition you expect in FY26 and this CapEx, you will be able to generate positive EBITDA based on the current gas cost because especially the reduction in the APM gas.

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : So is it possible to share what kind of gas sourcing you're planning for the CGD business based on the current APM gas allocation between APM gas and the market price gas and LNG?

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : Yes. So just two more thoughts. One is, if you look at your LNG and biogas plants and the overall CNG business, how do you see your rollout of LNG retail outlets in terms of CapEx and the volumes you are targeting? And similarly in biogas, what is the kind of volume we expect? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / NTS, BPCL.NS - Q3 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : Okay. So in your renewable energy plants like ONGC is planning a listing, HPCL may also go for a listing. So are you planning to hive off your renewable energy business to a separate entity? Is there any thoughts in terms of value unlocking in the renewable energy business?

Question: S Ramesh - Nirmal Bang Institutional Equities - Analyst : So one last question, if I may squeeze in. So in terms of the refining capacity in the globe and Asia, do you see any capacity closures that you expect based on the data you are getting from consultants? And what is the trend you expect in terms of refining capacity, say, over the next one, two years or any closure you're expecting?