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Bharat Petroleum Corporation Ltd.’s Q3 FY26 headline numbers were much above our estimated Ebitda/PAT mainly due to much better-than-expected gross refining margin of $13.25/barrel of oil which is at 8Q high.
Key highlights include:
- Clean GRM of $14.1/bbl supported by 11quarter high diesel and petrol cracks; BPCL’s reported GRM is the best among the all refiners that have declared results so far;
- ~24% processing of Russian (non-sanctioned) crude in Q3 FY26, materially supporting GRM expansion; \
- LPG under-recoveries declined to Rs 4.7 billion, a seven- quarter low, down 85% YoY. BPCL has received 2 tranches of the LPG compensation totaling Rs 12.7 billion from Government.;
- Sharp decline in total debt by 73% YoY/57% QoQ, an indicator of equity value improvement of Rs 16.3/share;
- Second interim dividend per share of Rs 10 (total Rs 17.5 implies 5% + yield) better than expected; and
- 9MFY26 capex stood at 118 billion with capex guidance of Rs 185 billion for FY26E.
Dolat Capital upgrades its FY26E EPS estimates by 16.3% factoring in the strong Q3 GRM and continued supernormal GMM in 9M. However, its FY27/FY28E earnings projections have been slightly modified by +0.2% each, thereby, continues to uphold ‘Accumulate’ rating with a revised SoTP of Rs 406/share (vs earlier Rs 410/share).
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