About the company: BPCL
• Bharat Petroleum Corporation Limited (BPCL) was established in 1952. It is one of the leading companies in the petroleum sector in India.
• It is a public sector company that is engaged in the business of refining crude oil and marketing petroleum products.
| Headquarter | Mumbai, Maharashtra |
| Sector | Refineries |
Area of Operation:
• Vast diversified product portfolio which includes: Fuels & Services, Lubricants, Aviation fuel, Refineries, Natural Gas, Pipelines, etc.
• It has refineries at Mumbai and Kochi, LPG bottling plants, and Lube blending plants at various locations.
• The Corporation’s marketing infrastructure includes a vast network of Installations, Depots, Retail Outlets, Aviation Fuelling Stations, and LPG distributors.
Chairman & MD: BPCL
Shri. Arun Kumar Singh (September’21 – Present)
Board of Committees:
When it comes to remuneration the company’s annual report has mentioned “There is no requirement of disclosure of the ratio of the remuneration of each Director to the median employee’s remuneration and other such details.”
Subsidiaries:
- Bharat Petroresources Limited (BPRL)- BPRL was incorporated in October 2006, as a 100% subsidiary of BPCL, to cater to the upstream activities of BPCL.
- Bharat Oman Refineries Limited (BORL)- BORL was incorporated in 1994 as a Joint Venture between BPCL and OQ SAOC (formerly known as Oman Oil Company SAOC).
- Bharat Gas Resources Limited (BGRL)- Bharat Gas Resources Limited (BGRL), a wholly-owned subsidiary of BPCL was incorporated in June 2018 for handling the Natural Gas business.
- BPCL-KIAL Fuel Farm Private Limited (BKFFPL)- BKFFPL was incorporated in May 2015 to design, construct, commission, and operate the Fuel Farm at Kannur International Airport.
- Apart from these subsidiaries, it is associated with 25+ Joint Ventures Companies and Associates.
Competitors:
• Indian Oil Corporation Ltd (₹ 108,700 Cr.)
• Hindustan Petroleum Corporation Ltd (₹ 37,755 Cr.)
Shareholding pattern:
Top Shareholdings:
- President of India – 52.98%
- LIC of India – 5.91%
Industry Overview:
- This sector is among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy.
- India’s economic growth is closely related to its energy demand, therefore, the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment.
- India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. Crude Oil import rose sharply to US$ 101.4 billion in 2019-20 from US$ 70.72 billion in 2016-17.
- Crude oil consumption is expected to grow at a CAGR of 3.60% to 500 million tonnes by 2040 from 221.56 million tonnes in 2017. India’s oil demand is projected to rise at the fastest pace in the world to reach 10 million barrels per day by 2030, from 5.05 million barrel per day in 2020.
Profit and Loss Statement:
Consolidated P&L (in Rs. Crores):
| Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | |
| Revenue from Operations | 1,87,815 | 2,01,251 | 2,35,895 | 2,98,226 | 2,84,572 | 2,30,163 |
| Expenses | 1,74,844 | 1,87,468 | 2,20,578 | 2,83,113 | 2,75,597 | 2,09,170 |
| Operating Profit | 12,971 | 13,783 | 15,317 | 15,112 | 8,975 | 20,993 |
| Profit before tax | 12,132 | 13,700 | 14,174 | 12,905 | 3,652 | 22,432 |
| Net Profit | 8,089 | 8,721 | 9,009 | 7,802 | 3,055 | 16,165 |
| EPS in Rs | 37.29 | 40.20 | 41.53 | 35.97 | 14.08 | 74.52 |
Key Pointers:
- Expenses of the company majorly include 80% Material cost.
- Decrease in retail demand majorly let to negative growth in revenue.
- Company made an excellent recovery in its profits.
- Sales can be categorized as slightly poor over last 5 years.
Balance Sheet:
Standalone Balance Sheet (in Rs. Crores):
| Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | |
| Equity Capital | 656 | 1,311 | 1,967 | 1,967 | 1,967 | 2,093 |
| Reserves | 27,138 | 30,033 | 35,108 | 37,255 | 35,022 | 51,634 |
| Borrowings | 23,388 | 35,725 | 37,659 | 44,839 | 65,476 | 54,532 |
| Trade Payables | 8,352 | 11,382 | 15,198 | 17,834 | 13,108 | 16,263 |
| Total Liabilities | 86,422 | 1,09,086 | 1,20,356 | 1,36,926 | 1,50,860 | 1,60,988 |
| Fixed Assets | 25,358 | 33,684 | 45,539 | 49,315 | 60,175 | 64,098 |
| Investments | 9,401 | 21,327 | 23,725 | 24,907 | 27,029 | 26,768 |
| Other Assets | 34,203 | 37,241 | 41,217 | 49,050 | 45,900 | 52,982 |
| Cash Equivalents | 4,202 | 1,885 | 1,354 | 663 | 1,165 | 8,110 |
| Loans n Advances | 6,352 | 5,839 | 8,101 | 14,228 | 11,692 | 3,916 |
| Total Assets | 86,422 | 1,09,086 | 1,20,356 | 1,36,926 | 1,50,860 | 1,60,988 |
Cash Flow:
Standalone Cash Flow (in Rs. Crores):
| Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | |
| Cash from Operating Activity | 11119 | 9041 | 11068 | 10157 | 7881 | 23554 |
| Profit from operations | 14171 | 14846 | 15788 | 16694 | 10798 | 23579 |
| Inventory | 1450 | -6553 | -1333 | -404 | -389 | -6367 |
| Receivables | 916 | -1956 | -2369 | -1748 | 2349 | -2589 |
| Working capital changes | 331 | -1788 | -1274 | -3531 | -692 | 3779 |
| Direct taxes | -3276 | -3904 | -3233 | -2773 | -1827 | -3663 |
| Cash from Investing Activity | -9233 | -15274 | -7066 | -10451 | -11135 | -2573 |
| Fixed assets purchased | -10184 | -9559 | -7752 | -10541 | -12197 | -9206 |
| Investment Purchases | -714 | -11386 | -26096 | -49830 | -39104 | -9102 |
| Dividends Received | 115 | 156 | 332 | 340 | 341 | 1555 |
| Cash from Financing Activity | -1332 | 4804 | -4218 | 207 | 3583 | -13981 |
| Dividends Paid | -2737 | -5495 | -3579 | -4006 | -5327 | -4924 |
| Proceeds from borrowings | 8381 | 15018 | 6235 | 7403 | 18439 | 4996 |
| Repayment of borrowings | 0 | 0 | -434 | -816 | -6023 | -16986 |
| Net Cash Flow | 555 | -1429 | -215 | -87 | 329 | 7000 |
Financial Ratios:
Stock Price:
| 1. Current Price | ₹ 337 |
| 2. Market Cap | ₹ 73,039 Cr |
| 3. Yearly fluctuation | ₹ 331 – 503 |
Ratios:
| P/E | ROCE | ROE | Op. Margin | Rev Growth | |
| BPCL | 5.54 | 24.90% | 39.55% | 10.23% | -19.12% |
| IOCL | 3.19 | 14.98% | 19.85% | 12.11% | -23.95% |
| HPCL | 3.9 | 19.16% | 30.48% | 7.99% | -13.32% |
Strengths:
- Large product portfolio.
- DIIs have increased their shareholdings.
- Strong EPS and Profit Growth in the last FY.
- Sharp rise in Cash & Cash equivalent.
- Company has decreased thier borrowings and also increased thier reserves.
- Reported strong financial ratios.
Weaknesses:
- Highly import dependent (the cost of raw material is subject to global economy).
- MFs decreased their holdings in the last quarter.
Opportunities:
- Loans given to customers for considered good is decreased therefore increasing the company’s cash balance.
- Undervalued when compared to Industry P/E.
Threats:
- FIIs have decreased their holdings.
- The covid-19 pandemic has impacted the sector in ways which may have far reaching and long lasting implications. Even the global energy demand witnessed one of the biggest declines in history.
- Company like HPCL with much lesser market cap but is at par with BPCL with regards to the financials.
Disclaimer: This shouldn’t be construed as a stock recommendation, investors discretion is advised while investing.
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