InvestorQ : How were the results of BPCL in the Sep-20 quarter?
sarah Leo made post

How were the results of BPCL in the Sep-20 quarter?

Rashi Mehra answered.
8 months ago

Bharat Petroleum or BPCL as it is popularly known, saw a 58% jump in its net profits in the Sep-20 quarter to Rs2590 crore. This growth came on the back of healthy refining margins and also inventory valuation.

These are the two key factors that drive prices for BPCL. The gross refining margins or GRM are benchmarked to the Singapore GRM and that has finally picked up and that is showing in this quarter. That has added to the profitability.

The second aspect is the inventory valuation. Normally, the closing stock is carried at the difference in price quarter on quarter. In this quarter, since the prices were sequentially higher for crude oil, it resulted in inventory profits for BPCL.

In the previous quarter, the company had witnessed substantial inventory valuation losses due to tepid crude prices that went as low as $20/bbl in the Brent Crude market. In fact, the WTI crude for delivery also went into negative prices.

However, prices have recovered with crude holding above $40/bbl in the Brent market. BPCL is one of the companies slated for a total government stake sale as part of the disinvestment process. That is the big trigger for the stock.