BPCL's June quarter profit up 11% on inventory gains

The company's total expenses also fell 4% to Rs 53,528 cr in the June quarter, from Rs 55,553 cr in the year-ago quarter

Bharat Petroleum Corporation (BPCL)’s net profit for the April-June 2016 quarter rose 11 per cent to Rs 2,620.5 crore, year-on-year, even as the state-run firm’s total income from operations fell three per cent to Rs 57,016 crore from Rs 58,768 crore a year ago. Total expenses for the quarter under review also fell four per cent to Rs 53,528 crore from Rs 55,553 crore in the year-ago quarter.

Overall, the company exceeded Street expectations. In a Bloomberg poll, 16 analysts had estimated BPCL’s standalone sales at Rs 51,285 crore while 22 analysts had estimated a net profit of Rs 2,178 crore.

“The higher profit is largely due to inventory gains, excluding that the numbers are broadly in line and even slightly lower. The real challenge would be in the coming quarters when GRMs (gross refining margins) may be lower and there may not be any inventory gains,” said an analyst with a domestic brokerage firm, who did not wish to be identified.

BPCL did not report any under-recoveries for the April-June 2016 quarter. Average GRMs on the account of low crude prices were lower at $6.09 a barrel in the June 2016 quarter against $8.55 per barrel reported in the corresponding period a year ago.

The firm's crude throughput was higher at 6.2 million tonnes (mt) against 6.07 mt reported a year ago. The company witnessed an improvement in market sales, primarily driven through retail sales in petrol, diesel and liquefied petroleum gas (LPG) products.

“The market sales for the quarter ended June 30, 2016 were higher at 9.73 mt compared to nine mt achieved during the corresponding period of the previous year,” the company said. The increase is mainly in retail sales of petrol at eight per cent, retail sales of diesel at 2.41 per cent and of LPG at 6.73 per cent, according to the company’s statement to the BSE. On Wednesday, BPCL closed at Rs 602.35 a share, 0.82 per cent lower from its previous close of Rs 607.35 apiece.