BPCL - March 2013 Results Preview - Motilal Oswal

- Similar to prior quarters, profitability of OMCs (BPCL, HPCL, IOC) would depend more on subsidy sharing, which is ad-hoc, than on business fundamentals. Government's subsidy compensation typically comes with a delay.

- 4QFY13 gross under-recovery is down 5% QoQ due to the impact of diesel reforms and lower LPG subsidies.

- In 9MFY13, BPCL's PAT loss stood at INR21.5b as it had to bear a net under-recovery of INR59b. Similar to FY12, we model OMCs' subsidy sharing at nil for FY13 and hence estimate INR59b over-recovery for 4QFY13E.

- For subsidy sharing, on an annual basis, we model OMCs' sharing at nil, upstream sharing at 40% and government sharing at balance 60% in FY13E/FY14E/FY15E.

- We peg the refinery throughput at 5.8 mmt for 4QFY13E v/s 6mmt in 4QFY12 and 5.6mmt in 3QFY13.

- We expect BPCL to report a profit of INR51.5b in 4QFY13E, thereby taking full year PAT to INR30b v/s INR13b in FY12.

- BPCL trades at 10.2x FY15E EPS and 1.3x FY15E BV. E&P upsides from Mozambique and Brazil are the key medium term triggers for the company. Buy.

Source : Equity Bulls

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