Analyst Corner: BPCL preferred pick among OMCs; TP unchanged at Rs 544

Consolidated recurring This fall revenue stood at Rs 58bn vs lack of Rs 3.6bn in Q4FY20; share of revenue from JV/associates is up 66% YoY.

This fall EPS surge pushed by stock achieve: Standalone Q4FY21 recurring revenue stood at Rs48.8bn vs lack of Rs877mn in Q4FY20 pushed by 1) crude and product stock achieve of Rs36.4bn vs lack of Rs 49bn in Q4FY20; 2) 17% YoY fall in curiosity value (debt is down 37% YoY however up 7% QoQ to Rs263bn in end-Mar’21); and three) 44% YoY rise in different earnings on account of foreign exchange achieve vs loss in Q4FY20.

Reported GRM at $6.64/bbl was up 8.9x YoY whereas core GRM at $2.46/bbl was down 67% YoY. Internet advertising margin was down 61% YoY to Rs1.2/l. Excluding stock achieve/loss, This fall standalone EPS is down 41% YoY. Consolidated recurring This fall revenue stood at Rs 58bn vs lack of Rs 3.6bn in Q4FY20; share of revenue from JV/associates is up 66% YoY. FY21 standalone and consolidated recurring EPS have been up 4.2x and three.9x YoY.

Auto gasoline advertising margin weak; want hikes to spice up it: Auto gasoline web advertising margin, which was up 37% YoY at Rs3.05/l in FY21, is weak at Rs1.28/l on 26-Could’21 and simply Rs0.49/l in FY22-TD vs our FY22 estimate of Rs2.5/l regardless of auto gasoline worth hikes of Rs3.04-3.59/l within the final three weeks. Internet margin is estimated at Rs1.48/l on 1-Jun’21 and Rs1.07/l on 16-Jun’21 at newest costs. Value hike or excise responsibility reduce (not handed on) of Rs1.2-1.7/l is required to spice up web margin to Rs2.5/l.

GRM weak in FY22-TD; diesel cracks restoration key to GRM rise: We estimate BPCL’s Q1FY22-TD GRM at $0.4/bbl vs our FY22 estimate of US$3.5/bbl. Diesel cracks, that are at $5.25/bbl in FY22-TD, have to rise to common over ~ $11/bbl for BPCL’s FY22E GRM to be at $3.5/bbl. Gradual restoration in international demand as vaccines are rolled out could assist diesel cracks and GRM recuperate.

BPCL is our most popular choose amongst OMCs: We hold our FY22E EPS and our goal worth of Rs544 (15% upside) unchanged; it assumes 56% of holding realises Rs612 (8x FY22E EV/EBITDA) in profitable bidder’s open supply and Rs459 (6x FY22E EV/EBITDA) is realised on stability. BPCL is a play on privatisation and privatisation going via at an analogous valuation as estimated by us is essential to our constructive stance. Amongst OMCs, we favor BPCL as we’re extra assured of positive aspects from privatisation than auto gasoline advertising margin and GRM recovering to stage of our estimates, which is extra essential to inventory efficiency of friends than of BPCL.