BPCL: Weak refining weighs on Q3, spotlight on capex, debt ahead

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Subscribe to enjoy similar stories. Bharat Petroleum Corp. Ltd (BPCL) reported 21% year-on-year growth in Ebitda for the December quarter (Q3FY25), thanks to lower crude oil prices, compared to a 65% decline in H1FY25.

The state-run oil refining and marketing company’s Q3 net profit rose 37%, but fell short of analysts' expectations due to reduced procurement from Russia and refining margins that came in below forecasts. BPCL’s refining margin in Q3 dropped to $5.6 per barrel, sharply down from $13.6 per barrel in Q3FY24 and $6.2 per barrel in H1FY25, largely due to a fall in global product prices. However, the marketing segment proved to be a strong performer, with margins improving due to stable domestic retail product prices.

As a result, integrated margin (refining plus marketing) remained nearly flat year-on-year at ₹10.4 per litre in Q3, compared to ₹8.5 per litre in H1FY25, according to data from Motilal Oswal Financial Securities. Read this | Refining margins of state-run oil marketing companies fall this fiscal Sure, overall margin could have been better, but lower procurement of crude oil from Russia, which is available at a discount of around $3 per barrel, weighed on performance. There is near-term uncertainty with regard to supplies from Russia.

BPCL’s management indicated in the call that the share of Russian crude in overall crude sourcing mix is fixed for January and February, but could drop to about 20% in March (31% in Q3FY25 and 32% in Q2FY25). This could put pressure on near-term refining margin even as the marketing business may benefit from stable retail prices. While greater clarity on Russian supply could provide a boost to BPCL’s stock, investors appear cautious.