Bharat Petroleum Corporation (BPCL) Q3FY21 reported Rs 14.4 billion of other income up 180% on a YoY basis. This was due to dividend income from Numaligarh Refinery worth Rs 6.1billion. Other expenses fell by 5% on a year-on-year basis to Rs 39.3 billion. Further interest expense declined sharply 51% YoY to Rs2.5 billion led by lower debt level and forex gains.

The company has raised capex guidance to Rs 90 billion in FY21 of which Rs 20 billion is for refinery, Rs 8 billion for petchem and Rs 36 billion for marketing & depot expansion; of which, Rs 57 billion have already been spent. Company has also guided capex of Rs 100 billion for FY22.

Commenting on the result review, IDBI Capital Markets & Securities said, "BPCL's Q3FY21 EBITDA/PAT was a strong beat to our forecast led by stronger than expected product sales volume, lower than expected employee expenses and significantly higher other income. Reported GRM came at USD 2.5/bbl owing to inventory gain of Rs 5 billion (USD 1.24/bbl) while core GRM stood at USD 1.23/bbl, in-line with our expectations. Domestic petroleum product sales volume improved 0.7% YoY to 11.1mmt. However, crude throughput declined 14% to 7.24 mmt, below our estimates.

Management indicated to close NRL divestment to a consortium of Oil India and Engineers India (Only bidder) by FY21. Further, it expects its marketing margin going forward to remain at the similar level of Q3FY21. We raise our estimates for FY21 and tweak our numbers for FY22/FY23 to factor in relatively lower marketing profit in FY22 and lower interest costs. We downgrade the stock to Accumulate from earlier Buy with a revised TP of Rs 445 (Rs 412 earlier)."

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