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BPCL: Should you invest?

March 28, 2022
in Stocks
bpcl

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.

HeadquarterMumbai, Maharashtra
SectorRefineries

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:

BPCL
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%
BPCL Shareholdings

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.
Industry Overview

Profit and Loss Statement:

Consolidated P&L (in Rs. Crores):

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Revenue from Operations1,87,8152,01,2512,35,8952,98,2262,84,5722,30,163
Expenses1,74,8441,87,4682,20,5782,83,1132,75,5972,09,170
Operating Profit12,97113,78315,31715,1128,97520,993
Profit before tax12,13213,70014,17412,9053,65222,432
Net Profit8,0898,7219,0097,8023,05516,165
EPS in Rs37.2940.2041.5335.9714.0874.52
Consolidated P&L (in Rs. Crores)

Key Pointers:

  1. Expenses of the company majorly include 80% Material cost.
  2. Decrease in retail demand majorly let to negative growth in revenue.
  3. Company made an excellent recovery in its profits.
  4. Sales can be categorized as slightly poor over last 5 years.
5 years growth rate (comparative)

Balance Sheet:

Standalone Balance Sheet (in Rs. Crores):

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Equity Capital6561,3111,9671,9671,9672,093
Reserves27,13830,03335,10837,25535,02251,634
Borrowings23,38835,72537,65944,83965,47654,532
Trade Payables8,35211,38215,19817,83413,10816,263
Total Liabilities86,4221,09,0861,20,3561,36,9261,50,8601,60,988
Fixed Assets25,35833,68445,53949,31560,17564,098
Investments9,40121,32723,72524,90727,02926,768
Other Assets 34,20337,24141,21749,05045,90052,982
Cash Equivalents4,2021,8851,3546631,1658,110
Loans n Advances6,3525,8398,10114,22811,6923,916
Total Assets86,4221,09,0861,20,3561,36,9261,50,8601,60,988
Standalone Balance Sheet (in Rs. Crores):
5 years growth rate (%)

Cash Flow:

Standalone Cash Flow (in Rs. Crores):

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Cash from Operating Activity1111990411106810157788123554
Profit from operations141711484615788166941079823579
Inventory1450-6553-1333-404-389-6367
Receivables916-1956-2369-17482349-2589
Working capital changes331-1788-1274-3531-6923779
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 Received1151563323403411555
Cash from Financing Activity-13324804-42182073583-13981
Dividends Paid-2737-5495-3579-4006-5327-4924
Proceeds from borrowings83811501862357403184394996
Repayment of borrowings00-434-816-6023-16986
Net Cash Flow555-1429-215-873297000
Standalone Cash Flow (in Rs. Crores)

Financial Ratios:

Stock Price:

1. Current Price₹ 337
2. Market Cap₹ 73,039 Cr
3. Yearly fluctuation₹ 331 – 503
Stock Price

Ratios:

 P/EROCEROEOp. Margin Rev Growth
BPCL5.5424.90%39.55%10.23%-19.12%
IOCL3.1914.98%19.85%12.11%-23.95%
HPCL3.919.16%30.48%7.99%-13.32%
Ratios
Financial Ratios

Strengths:

  1. Large product portfolio.
  2. DIIs have increased their shareholdings.
  3. Strong EPS and Profit Growth in the last FY.
  4. Sharp rise in Cash & Cash equivalent.
  5. Company has decreased thier borrowings and also increased thier reserves.
  6. Reported strong financial ratios.

Weaknesses:

  1. Highly import dependent (the cost of raw material is subject to global economy).
  2. MFs decreased their holdings in the last quarter.

Opportunities:

  1. Loans given to customers for considered good is decreased therefore increasing the company’s cash balance.
  2. Undervalued when compared to Industry P/E.

Threats:

  1. FIIs have decreased their holdings.
  2. 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.
  3. 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.

Read Next: New Year’s Resolutions That Can Make You the Wonder Women of Your Life.

For more information, reach us at [email protected]

Team, MyGoalMySip.

Tags: bpcl
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    MyGoalMySip is an Online Mutual fund investment platform powered by Prudent Wealth. As an investor, it might be hard to find the perfect investment opportunity; therefore, we’re here to help you make an informed decision.

    Our goal is to educate people and make them financially literate, and at the same time guide you in your investment journey, in short MyGoalMySip is your investment buddy.

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