Prefer BPCL among OMCs, keep TP unchanged at Rs 544

FY21 standalone and consolidated recurring EPS had been up 4.2x and three.9x YoY.

This fall EPS surge pushed by stock achieve: Standalone Q4FY21 recurring revenue stood at Rs 48.8billion vs lack of Rs 877million in Q4FY20 pushed by 1) crude and product stock achieve of Rs 36.4billion vs lack of Rs 49billion in Q4FY20; 2) 17% YoY fall in curiosity price (debt is down 37% YoY however up 7% QoQ to Rs 263billion in end-Mar’21); and three) 44% YoY rise in different earnings attributable to 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 and marketing margin was down 61% YoY to Rs 1.2/l. Excluding stock achieve/loss, This fall standalone EPS is down 41% YoY. Consolidated recurring This fall revenue stood at Rs 58billion vs lack of Rs 3.6billion in Q4FY20; share of revenue from JV/associates is up 66% YoY. FY21 standalone and consolidated recurring EPS had been up 4.2x and three.9x YoY.

Auto gas advertising and marketing margin weak; want hikes to spice up it: Auto gas internet advertising and marketing margin, which was up 37% YoY at Rs 3.05/l in FY21, is weak at Rs 1.28/l on 26-Might’21 and simply Rs 0.49/l in FY22-TD vs our FY22 estimate of Rs 2.5/l regardless of auto gas value hikes of Rs 3.04-3.59/l within the final three weeks. Internet margin is estimated at Rs 1.48/l on 1-Jun’21 and Rs 1.07/l on 16-Jun’21 at newest costs. Value hike or excise obligation reduce (not handed on) of Rs 1.2-1.7/l is required to spice up internet margin to Rs 2.5/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 $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 world demand as vaccines are rolled out might assist diesel cracks and GRM get well.

BPCL is our most popular decide amongst OMCs: We preserve our FY22E EPS and our goal value of Rs 544 (15% upside) unchanged; it assumes 56% of holding realises Rs 612 (8x FY22E EV/EBITDA) in profitable bidder’s open supply and Rs 459 (6x FY22E EV/EBITDA) is realised on stability. BPCL is a play on privatisation and privatisation going by at the same valuation as estimated by us is essential to our constructive stance. Amongst OMCs, we desire BPCL as we’re extra assured of features from privatisation than auto-fuel advertising and marketing margin and GRM recovering to stage of our estimates, which is extra essential to inventory efficiency of friends than of BPCL.