The crude price hike has taken a toll on BPCL's margins in the third quarter. While the turnover has grown 71% the pre-tax profits have come down by 30% . The post tax profits have declined by 18.7%. Obviously with the crude price doubling to $27 a barrel and no commensurate rise in product prices, the margins were bound to be under pressure.
Further, with the government fiat on kerosene production of atleast 9%, the margins in the next quarter will continue to remain under pressure unless the government reduces the import duty on crude and allows rationalisation (read increase) of the end product prices. During the quarter the company processed crude of 1.85 million metric tonnes as against 2.35 million metric tonnes. This was due to the planned shutdown of major units of the refinery during October-November 1999. It made sense for the company to have a shut down during this time as processing more crude would have only hurt the margins further.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407