Bonus Alert: HPCL, BPCL in focus ahead of Q4 results, first free share issue in seven years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL) will be in focus on Thursday ahead of their March quarter results. The bigger focus will be on the both the downstream refiners declaring a bonus issue of shares, a first for both companies in seven years.

For HPCL, this will be the third bonus issue of shares in the last decade. The company earlier issued one free share for every two held in 2017 and two free shares for every one held in 2016.

In BPCL’s case, it also issued one free share for every two held in 2017 and one free share for every one share in 2016 and 2012 respectively.

A CNBC-TV18 poll expects BPCL’s revenue to remain flat at ₹1.15 lakh crore during the quarter, while Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) may see a 43% jump compared to the December quarter.

BPCL’s strong performance in the marketing segment is likely to partially offset the strong marketing segment.

Gross Refining Margin on a reported basis is seen at $17.1 per barrel, with blended gross marketing margin seen at ₹3.4 per litre. GRMs are the difference in value between the refined products sold and the feed stock consumed. It is calculated per barrel of crude oil processed.

HPCL’s revenue for the quarter is likely to drop by 6% compared to the December quarter. However, Earnings Before Interest, Tax, Depreciation and Amortisation is likely to double sequentially. This is because of higher refining margins, improvement in diesel marketing margins and inventory gains on a low base.

GRMs for HPCL are likely to be coming in at $10.5 per barrel, compared to $8.5 per barrel in the previous quarter.

Shares of all three state-run oil refiners surged between 30% to 40% during the January-March quarter as multiple brokerages upgraded these stocks citing the valuation comfort. However, after the run-up, the street appears divided on the prospects as some still see room to run for these stocks, some have shifted to the camp of valuations not justifying fundamentals.

Shares of HPCL have surged 105% in the last 12 months, while those of BPCL have risen 70% during the same period.

(With Inputs From Sonal Bhutra.)

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow