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BPCL: Look beyond the bottomline - Views on News from Equitymaster
 
 
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  • Aug 1, 2000

    BPCL: Look beyond the bottomline

    BPCL has posted a strong topline growth of 83%. The increase in turnover was driven by increased volume and price realisations. Purchases for resale contributed to the increased volume as the throughput of the refinery declined due to planned shutdowns in the 1st quarter. The throughput declined from 2.2 m tonnes to 1.7 m tonnes.

    (Rs m) 1QFY00 1QFY01 Change
    Sales 59,106 108,097 82.9%
    Other Income 301 340 13.0%
    Expenditure 55,470 103,423 86.4%
    Operating Profit (EBDIT) 3,636 4,674 28.5%
    Operating Profit Margin (%) 6.2% 4.3%  
    Interest 270 492 82.2%
    Depreciation 921 2,245 143.8%
    Profit before Tax 2,746 2,277 -17.1%
    Tax 730 401  
    Profit after Tax/(Loss) 2,016 1,876 -6.9%
    Net profit margin (%) 3.4% 1.7%  
    No. of Shares (eoy) 150 150  
    Earnings per share* 53.8 50.0  
    *(annualised)      

    Although the operating profit of the company has grown significantly the growth is largely driven by increased volumes and not margins. In fact, the OPM has been under pressure due to the sharp rise in feedstock prices (crude oil) without a corresponding increase in product prices for the quarter ended June'00. Going forward the margins should improve with crude prices showing signs of softening.

    The sharp increase in interest payments has been due to increased borrowings for meeting working capital requirements. The net working capital has increased as a result of increased business activity but more importantly due to the non-reimbursement of funds from the oil co-ordination committee (OCC).

    The company seems to be keeping up its retail thrust with the focus of acquiring a large customer base for it LPG retail business. Consequently, the depreciation for 1QFY01 has grown significantly, as the practice is to depreciate LPG cylinders by 100%.

    The three year average P/E multiple of BPCL is 12.6. It is currently trading at a multiple of 3.6 on 1QFY01 annualised earnings.

     

     

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