28 May 2015
4QFY15 Results Update | Sector: Oil & Gas
BPCL
BSE SENSEX
27,507
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Free float (%)
Financials & Valuation (INR b)
Y/E MAR
Sales
EBITDA
Adj. PAT
Adj.EPS(INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015 2016E 2017E
2,424 2,011 2,358
96.0
48.1
66.5
22.9
23.0
16.9
12.3
2.6
98.4 107.1
53.2
73.5
10.6
22.0
17.3
11.1
2.3
58.9
81.5
10.8
21.2
18.3
10.0
2.0
S&P CNX
8,319
BPCL IN
723.0
835/517
10/18/39
45.1
CMP: INR817
TP: INR1,047 (+28%)
Buy
M.Cap. (INR b) / (USD b) 590.7/9.3
Avg Val,INRm/Vol ‘000 1165/1728
310.4 358.2 411.6
Estimate change
TP change
Rating change
13%
9%
Significant beat led by higher GRM and marketing margins; upgrading estimates
4QFY15 EBITDA and PAT were significantly above estimates at INR44.5b and INR28.5b,
respectively, led by (a) superior GRM helped by lower fuel & loss and (b) higher
marketing profitability. Diesel deregulation gives pricing flexibility to OMCs to manage
inventory and GRM variations through marketing margins (as seen in recent quarters).
We believe OMCs are now structural investment plays led by (a) higher earnings
predictability and (b) increase in profitability leading to higher RoEs (BPCL’s cons. FY15
RoE at 23%). Upgrading FY16/FY17 earnings by ~13% (led by higher GRM).
n
Beats estimates:
4QFY15 EBITDA at INR44.5b (est. of INR31.8b) was significantly
above est.—led by (a) GRM at USD7.9/bbl, (b) higher marketing profits (estimate
over-recovery of ~INR1.6/ltr in petrol/diesel in 4QFY15); this was partially negated
by (a) adventitious inventory loss of INR14.3b (v/s loss of INR2.2b in 4QFY14 and
INR16.6b in 3QFY15). PAT stood at INR28.5b ((est. of INR17.6b; -30% YoY, +418%
QoQ), helped by higher other income at INR6.2b (+36% YoY, +59% QoQ).
n
Marginal subsidy over-recovery in 4QFY15:
BPCL’s 4QFY15 gross under-recovery
stood at INR9.5b—the government shared INR22.9b (32%) and upstream
adjustment resulted in a reversal of INR13.3b; but it still led to over-recovery of
INR70m. We model OMCs’ sharing at 3%/3% in FY16/FY17.
n
Reported GRM of USD7.9/bbl:
4QFY15 reported GRM stood at USD7.95/bbl
(+18% YoY, 5x QoQ), helped by (a) higher gasoline, naphtha and FO cracks; (b)
lower crude price, which helped to reduce Fuel & Loss.
n
Marketing division shines; YTD gross debt down 36%:
BPCL’s gross debt declined
36% in FY15 to INR130b, helped by lower working capital, higher marketing
profitability and prompt government subsidy payment. We expect BPCL’s return
ratios to remain strong, with FY16E RoE at ~22%.
n
Upgrading estimates and target price:
BPCL’s core profitability has improved with
auto fuel marketing margin improvement, and the FID (Final Investment Decision)
at Mozambique E&P block will be the additional trigger for the stock. We are
upgrading FY16/FY17 earnings by ~13% (led by higher GRM) and TP to INR1,047
(v/s INR959 earlier). The stock trades at 10x FY17E EPS of INR81.5 and 1.3x FY17E
BV (adjusted for investments). Maintain
Buy.
Harshad Borawake
(HarshadBorawake@MotilalOswal.com); +91 22 3982 5432
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

BPCL
Exhibit 1: BPCL 4QFY15 and FY15 earnings snapshot (INRm)
4QFY14
Key Operating Metrics
Brent (USD/bbl)
Fx rate (INR/USD)
Marketing volume (mmt)
GRM (USD/bbl)
Reuters Singapore GRM (USD/bbl)
Refinery thr' put (mmt)
Financial Summary (INRm)
Net Sales
Adj. EBITDA
Refining (post USD1.6/bbl opex)
Marketing & others
EBITDA Margin (%)
Adventitious gain/(loss)
Net subsidy gain/(loss)
Forex gain/(loss)
Reported EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
PBT
Income Tax
Tax rate (%)
PAT
PAT margin (%)
EPS
108.2
62.0
8.9
6.6
6.2
6.1
3QFY15
77.0
61.9
8.6
1.6
6.3
5.8
4QFY15
55.1
62.2
8.7
7.9
8.6
6.1
YoY (%)
-49%
0%
-2%
18%
39%
1%
QoQ (%)
-28%
0%
1%
404%
37%
5%
FY14
107.8
60.6
34.0
4.3
5.6
23.4
FY15
86.0
61.1
34.5
3.6
6.4
23.2
YoY (%)
-20%
1%
1%
-17%
13%
-1%
747,366
24,370
13,905
10,465
3.3%
(2,180)
36,514
4,520
63,224
8.5%
(6,189)
57,035
(2,048)
4,581
59,567
(18,884)
31.7%
40,684
5.4%
56.3
578,728
29,284
(116)
29,401
5.1%
(16,610)
91
(1,482)
11,283
1.9%
(6,265)
5,019
(1,201)
3,922
7,740
(2,228)
28.8%
5,512
1.0%
7.6
513,043
57,899
17,492
40,407
11.3%
(14,270)
70
844
44,542
8.7%
(6,991)
37,552
(1,391)
6,238
42,399
(13,870)
32.7%
28,529
5.6%
39.5
-31%
138%
26%
286%
-11%
98%
n.a.
37%
2,599,335
75,728
27,861
47,867
2.9%
15,760
(5,115)
(6,781)
79,592
3.1%
(22,468)
57,124
(13,591)
15,957
59,490
(18,881)
31.7%
40,609
1.6%
56.2
2,379,053
115,381
20,501
94,880
4.8%
(31,420)
(4,874)
2,243
81,330
3.4%
-8%
52%
-26%
98%
n.a.
-100%
-81%
-30%
n.a.
-23%
n.a.
295%
n.a.
-5%
n.a.
2%
n.a.
-34%
n.a.
36%
-29%
n.a.
3.2%
-30%
2.2%
-30%
n.a.
648%
n.a.
59%
448%
n.a.
13.6%
418%
483.9%
418%
(25,160)
12%
56,170
-2%
(5,831)
-57%
23,816
49%
74,155
25%
(23,310)
n.a.
31.4%
50,845
25%
2.1%
70.3
25%
Source: Company, MOSL
Exhibit 2: Ad-hoc subsidy sharing resulting in volatile quarterly profits (INRb)
PAT
Net (under)/over recovery
4QFY08
4QFY09
4QFY10
4QFY11
4QFY12
4QFY13
4QFY14
4QFY15
Source: Company, MOSL
28 May 2015
2

BPCL
Exhibit 3: BPCL Marketing volume trend – largely flat QoQ (mmt)
7.4 7.8 7.8 7.0
7.3
7.0 6.9
6.8 7.1 6.9 6.5 7.0 7.3
6.7
6.6
6.3
8.8 8.9 9.1
8.6 8.7
8.2 8.5 7.8 8.5 8.6 8.6 7.8
8.0
8.0
6.3
5.8
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: Company, MOSL
Exhibit 4: BPCL GRM trend – Superior GRM in 4QFY15 at USD7.9/bbl (USD/bbl)
12.8
BPCL GRM
9.0
Singapore GRM
9.1
7.9 7.5
6.7
6.4
4.2
3.0
1.7
4QFY11
3.5
2.6
4QFY13
4.8
6.3
6.0
4.1
4.7
1.8
4QFY14
8.1
6.9
6.8
3.4
5.8
3.6
5.5
4.1
4.9
3.2
3.2
4QFY08
0.5
4QFY09
3.8
5.0
3.7
1.9
3.7
3.6
2.8
1.3
4QFY10
5.5
4.2
4.6
8.5
7.3
6.9
8.7
6.6
5.4
6.2 5.8
4.3
6.6
3.4
4.8
6.3
8.6
7.9
4QFY12
1.5 1.6
4QFY15
Source: Company, MOSL
Exhibit 5: BPCL refinery-wise throughput trend – up 5% QoQ led by 11% jump in Kochi crude processing (mmt)
Refinery thr'put (mmt)
5.6 5.2
5.2
5.0 5.0 5.3 4.8 5.3
2.0 2.1 2.1 2.0 1.9 2.2 1.7 2.0
Mumbai
5.6 5.7 5.6 5.6
Kochi
Total
6.1 6.0 5.9 5.9
6.1 5.8 6.1
6.1
6.0
5.6
5.6 5.8 5.6
5.3
4.2
1.2
5.0
5.6 5.2 5.6
5.0
2.4 2.3 2.2
2.1 1.9 2.5 2.7 2.6 2.6 2.8 2.2 2.6 2.7 2.7 2.2 2.8 2.5 2.8 2.4 2.7
1.9 2.4
2.1
3.2 3.4 3.1 3.0 3.1 3.1 3.1 3.3 2.9 3.1 3.2 3.3 3.3 3.4 2.9 3.4 3.3 3.1 3.5 3.4 3.3 3.2 3.4 3.2 3.0 3.3 3.4 3.3 2.9 3.3 3.4 3.4
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: Company, MOSL
28 May 2015
3

BPCL
Exhibit 6: BPCL under recovery quarterly trend (INRb)
180
120
60
0
(60)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: Company, MOSL
28 30
50
Upstream Sharing
115
72
28
(8)
103
38 46
25 35
22 30
11
73
Govt. subsidy
Net Under/ (over)recovery
103
49
98
Gross Under recovery
116
90 94 90
61
88 99 97
76
67
50
34
10
Exhibit 7: Industry level gross under recoveries have come down sharply (INRb)
Gross under recoveries
HPCL + BPCL + IOCL (INRb)
436
70
66
299
-
1Q
325
215
63
60
92
-
2Q
FY12
65
73
187
-
3Q
406
87
78
241
-
4Q
Petrol
478
115
73
290
-
1Q
378
70
71
236
-
2Q
FY13
393
110
77
207
-
3Q
362
105
75
182
-
4Q
254
85
64
105
-
1Q
354
93
75
186
-
2Q
FY14
398
127
85
185
-
3Q
393
159
82
152
-
4Q
287
224
121
75
90
-
1Q
125
73
26
-
2Q
FY15
Source: PPAC, Industry, MoPNG
159
103
64
-
(7)
3Q
53
17
36
-
4Q
Diesel
PDS Kerosene
Domestic LPG
Total
Exhibit 8: BPCL reported nil under recoveries sharing led by full compensation from govt and upstream companies
INRb
Gross Under recovery
Less: Sharing
Upstream Sharing
Govt. subsidy
Net Under/
(over)recovery
As a % of Gross
1Q
102.9
34.1
35.2
33.6
33
FY12
2Q
3Q
48.7 76.3
4Q
1Q
98.5 116.3
FY13
2Q
3Q
90.3 93.7
4Q
89.7
1Q
61.3
FY14
2Q
3Q
88.0 98.7
41.9
44.0
2.2
2
4Q
96.6
1Q
67.4
FY15
2Q
3Q
50.4 34.0
4QFY15 (%)
4Q YoY QoQ
9.5 -90% -72%
16.4 35.7 43.3 36.6 36.2 36.0 59.6 36.7
0.0 69.9 91.5
0.0 72.4 59.9 86.7 19.2
32.3
(29.4) (36.4)
79.6
(18.3) (2.2) (56.7)
5.4
66
nm
nm
68
(20)
(2)
(63)
9
39.7 37.5 38.3
25.0 95.6 24.1
34.0
(36.5)
5.0
34
(38)
7
35.3 23.3
(13.3)
n.a. n.a.
15.1 10.8 22.9 -76% 112%
(0.0) (0.1) (0.1)
n.a. n.a.
(0)
(0)
(1)
Source: Company, MOSL
28 May 2015
4

BPCL
Exhibit 9: We model ~3% subsidy sharing by OMC’s in FY16/FY17 (INRb)
(INR b)
FY07
FY08
Fx Rate (INR/USD)
45.2
40.3
Brent (USD/bbl)
64
82
Product-wise Gross Under recoveries (INR b)
Petrol
20
73
Diesel
188
353
Kerosene
179
191
LPG
107
156
Total
494
773
Sharing of Gross Under recoveries (INR b)
Government
241
353
Upstream
205
257
OMC's
48
163
Total
494
773
Sharing of Gross Under recoveries (%)
Government
49
46
Upstream
42
33
OMC's
10
21
Total
100
100
FY09
46.0
85
52
523
282
176
1,033
713
329
(9)
1033
69
32
(1)
100
FY10
47.5
70
52
93
174
143
461
260
145
56
461
56
31
12
100
FY11
45.6
86
27
348
200
205
780
410
303
67
780
53
39
9
100
FY12
47.9
114
0
819
278
284
1,385
829
552
0
1,385
60
40
0
100
FY13
54.5
111
0
915
296
399
1,610
1,000
600
10
1,610
62
37
1
100
FY14
60.6
108
0
628
306
465
1,399
707
671
21
1,399
51
48
2
100
FY15
61.1
86
0
109
248
366
723
273
428
22
723
38
59
3
100
FY16E
63.0
60
0
0
153
170
323
216
97
10
323
67
30
3
100
FY17E
64.0
70
0
0
179
307
487
326
146
15
487
67
30
3
100
Source: PPAC, MoPNG, MOSL
Exhibit 10: Government has increased auto fuel excise duty sharply in last few quarters
Petrol Excise Duty (INR/ltr)
14.8
14.8 14.8 14.8
9.5
4.7
3.7
3.7
3.7
4.7
2.1
2.1
9.5
9.5
11.0
8.2
5.1
6.1
Diesel Excise Duty (INR/ltr)
17.5 17.5
13.8 13.8 13.8
15.4
13.3
10.3 10.3
3.6
3.6
3.6
*Ad-valorem duty in nil since Jan-08
Source: PPAC, MoPNG, MOSL
Exhibit 11: Auto Fuel Retail Price trend in India – Despite excise duty hikes, auto fuel prices
still below their peak levels
80
70
60
50
40
30
20
May-07
May-09
May-11
May-13
May-15
Diesel monthly
price hikes begin
Diesel
de-regulated
Gasoline price (INR/ltr)
Diesel price (INR/ltr)
Petrol
de-regulated
Source: PPAC, MoPNG, MOSL
28 May 2015
5

BPCL
LNG price increase could expedite Mozambique project FID
n
n
n
n
BPCL’s Mozambique block (JV partners: Anadarko -26.5%, Mitsui – 20%, ENH –
15%, PTT – 8.5%, ONGC – 15%, BPCL – 10% and OINL – 5%) has witnessed
substantial resource upgrades from 3-4tcf in 2010 to 55-70+ tcf in 4QFY14 and
further appraisal could add more.
Mozambique government has passed the enabling legislation and has also
cleared the decree law (critical for development timelines).
BPCL’s JV partner and operator in Mozambique LNG projects, Anadarko recently
announced the selection of contractors for initial Mozambiue LNG development
project. While this does not guarantee the FID, it nevertheless makes sure that
the pre-development steps are largely on track.
We expect further upside from BPCL’s block in SEAL basin in Brazil where
reserve estimates are yet to be announced.
Exhibit 12: BPCL’s Mozambique block has witnessed continuous reserve upgrades (tcf)
Recoverable Resource Range (tcf)
65
50
30
11
6
11
10
Oct-11
15
17
Apr-12
35
24
35
50
50
45
50
70
70
4
3
Nov-10
Jun-12
Mar-14
Source: Company, MOSL
28 May 2015
6

BPCL
Valuation and view
n
n
n
n
n
n
n
Ongoing reforms have the potential to transform OMCs into a structural
investment play in our view led by (a) higher earnings predictability and (b)
increase in profitability leading to higher RoE’s.
With retail pricing freedom post diesel de-regulation, OMCs profitability is set to
improve led by (a) lower interest cost - diesel de-regulation and lower oil prices
to reduce working capital loans and (b) higher auto fuel marketing margins –
parity with international peers and relatively high cost for private marketers
provide ample room for improvement.
We believe OMCs economic moat is widening led by (1) scope for meaningful
increase in marketing margin and hence profitability, (2) slower ramp-up by
private marketers, (3) high volume growth aided by expected GDP boost and (4)
improving balance sheet with increasing cash flow.
Likely increase in diesel marketing margin:
The next big earnings jump for
OMC’s would come from likely higher marketing margin in Diesel. We believe
that OMC’s could atleast earn additional marketing margin of INR0.5-1/ltr and
even if private players take market share as high as 15%, on a net basis OMC’s
will benefit. An INR0.5/ltr increase in diesel marketing margin increases BPCL’s
EPS by ~18%. We model additional diesel margin of INR0.5/ltr in FY16/FY17.
Expect upside potential in BPCL’s E&P business:
Our E&P value for BPCL stands
at INR171/sh with Mozambique - INR158 and Brazil - INR12. Triggers would be
reserve certification/FID for Mozambique block and results from exploratory
drilling in Brazil.
Our fair value stands at INR1,047/share – an average of P/B multiple of 2.2x,
EV/EBITDA multiple of 6x and P/E multiple of 12x. We value BPCL’s investments
at INR267/share, which comprises of E&P potential: INR171/share, listed
investments: INR38/share (post 25% discount), and treasury shares:
INR58/share
We are upgrading FY16/FY17 earnings by ~13% led by higher GRM and TP to
1,051 (v/s INR959 earlier). The stock trades at 10.1x FY17E EPS of INR81.5 and
1.3x FY17E BV (adjusted for investments). Maintain Buy.
FY09
45.8
84.8
27.1
5.1%
5.42
5.75
(0.3)
20.4
-3%
238
76
162
0
0%
FY10
47.5
69.6
27.7
2.4%
3.01
3.55
(0.5)
20.4
0.3%
101
36
44
21
21%
FY11
45.7
86.5
29.1
4.9%
4.5
5.2
(0.7)
21.8
6.6%
180
70
65
45
25%
FY12
47.9
114.5
31.1
7.0%
3.2
8.2
(5.1)
22.9
5.2%
326
130
197
0
0%
FY13
54.5
110.0
33.3
6.9%
5.0
7.7
(2.7)
23.2
1.2%
390
168
219
2
1%
FY14
60.6
107.8
34.0
2.1%
4.3
5.6
(1.3)
23.4
0.6%
345
156
184
5
1%
FY15E
61.0
85.9
35.0
2.8%
2.7
5.7
(3.0)
23.2
-0.6%
FY16E
62.0
60.0
36.4
4.0%
3.5
6.0
(2.5)
23.2
0.0%
FY17E
62.0
70.0
37.8
4.0%
4.1
6.0
(2.0)
24.0
3.4%
Exhibit 13: BPCL – Key Assumptions
Exchange Rate (INR/USD)
Brent Crude (USD/bbl)
Market Sales (MMT)
YoY (%)
GRM (USD/bbl)
BPCL GRM
Reuters Singapore GRM
Prem/(disc) (USD/bbl)
Refinery Throughput (mmt)
YoY (%)
Under recoveries Sharing (INRb)
Gross under recoveries
Upstream sharing
Govt. sharing
Net sharing
Net sharing (%)
170
67
105
98
34
53
69
32
50
3
1
3
2%
3%
3%
Source: Company, MOSL
7
28 May 2015

BPCL
Exhibit 14: FY16E earnings sensitivity to GRM (USD/bbl) and marketing margin (INR/KL)
73.5
2.0
3.0
4.0
5.0
6.0
1,400
42.7
52.9
63.1
73.3
83.5
Marketing Margins (INR/KL)
1,900
2,400
2,900
53.1
63.5
73.9
63.3
73.7
84.1
73.5
83.9
94.3
83.7
94.1
104.5
93.9
104.3
114.7
3,400
84.3
94.5
104.7
114.9
125.1
Source: MOSL
Exhibit 15: OMC’s have more than double their petroleum retail outlets in the last decade
Retail outlets ('000)
HPCL
BPCL
IOCL
Private
39
3
19
9
9
FY10
42
3
19
9
10
FY11
Total
45
3
21
10
11
49
3
22
12
12
24
52
3
22
-
11
5
5
FY04
26
0
13
6
6
FY05
31
2
15
7
7
FY06
35
3
16
8
8
FY07
37
3
18
8
8
FY08
38
3
18
8
8
FY09
13
13
FY12
FY13
FY14
Source: Company, MOSL
Exhibit 16: BPCL’s RoE’s have outperformed HPCL and IOCL in the last three years (%)
25
20
15
10
5
0
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
HPCL
BPCL (Cons)
IOCL (Cons)
Source: Company, MOSL
28 May 2015
8

BPCL
BPCL: Story in charts: Moving from downstream to integrated model
Exhibit 17: BPCL’s current earning largely from refining
& Marketing businesses (%)
Refining
3
6
3
4
67
1
3
56
Marketing
1
2
58
2
3
76
Pipelines
3
3
71
2
7
71
Others
0
5
61
0
6
59
Exhibit 18: Model marginal improvement in GRM (USD/bbl)
Prem/(Disc) to Singapore
Singapore GRM
8.2
7.7
5.8
5.2
3.6
5.4
(0.3)
3.0
(0.5)
4.5
(0.7)
(5.1)
3.2
5.0
BPCL GRM (USD/bbl)
5.6
4.3
(1.3)
6.4
6.5
4.0
(2.5)
6.5
4.3
(2.3)
80
3.6
(2.8)
12
26
40
39
19
23
20
34
34
(2.7)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 19: Expect profitability to improve led by lower
interest and higher marketing margin (INRb)
EBIDA (INRb)
94
67
34
7
31
17
43
48
19
17
9
51
41
PAT (INRb)
96
98
54
107
Exhibit 20: Return ratios to improve significantly (%)
RoE (%)
RoCE (%)
23.0
21.6
22.0
21.2
18.3
59
5.9
4.8
11.9
11.1
9.5
8.4
5.0
11.5
15.2
11.4
16.9
17.3
3.9
Source: Company, MOSL
Source: Company, MOSL
Exhibit 21: Silver lining led by E&P successes, current value at INR171/share
Country
Mozambique
Brazil (Wahoo & Others)
Brazil (SEAL Basin)
Successful wells
13
3
5
Reserves announced
45-70 tcf
150-200mmbbl (includes only
Wahoo discover)
Reserves not declared yet
Comments
We value the block at USD3.5/boe, assuming recoverable reserve
production from 2019, implying INR158/share
We value the block at USD10/boe, assuming recoverable reserves
of production from 2018, implying INR12/share
We currently do not assign any value to this block
Source: Company, MOSL
28 May 2015
9

BPCL
BPCL: Story in charts
Exhibit 22: BPCL to benefit from lower interest
costs in coming years….
Interest Cost (INR b)
23
14
14
26
22
20
12
9
Exhibit 23: Refining capacity set to increase by 1.6x…..
8
Source: Company, MOSL
Source: Company, MOSL
Exhibit 24: Expect overall under recovery to reduce
80% by FY16 over FY14A INRb)
Diesel
Kerosene
1,610
1,385
1,033
176
282
523
780
461
143
174
93
205
200
348
284
278
819
399
296
915
465
306
628
723
366
248
109
323
170
153
0
1,399
Exhibit 25: Petroleum sales volume to witness
steady growth (mmt)
Marketing Sales (mmt)
27
28
29
31
33
Refinery Throughput (mmt)
37
36
34
34
LPG
Total
20
20
22
23
23
23
23
23
24
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 26: 1 Year forward P/B chart; adjusted for investment
value trading at 1.5x P/BV
Exhibit 27: BPCL: Fair value at INR1,047/share (INR/sh)
2.6
P/B (x)
10 Yrs Avg(x)
15 Yrs Avg(x)
ROE (%)
5 Yrs Avg(x)
33.0
2.2
EV/EBITDA (FY17E 6x)
P/B (FY17E 2.0x)
P/E (FY17E 12x)
Average
1,090
817
1,235
1,047
Source: Company, MOSL
1.8
1.5
1.3
23.0
1.0
1.3
13.0
0.2
3.0
Source: Company, MOSL
28 May 2015
10

BPCL
Financials and valuations
Income Statement (Consolidated)
Y/E March
Net Sales
Change (%)
Finished Gds Purchase
RM & Other exp
Other oper. expenses
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Minority Interest
PAT
Adj. PAT
Change (%)
2011
1,536,450
24.1
701,497
692,475
99,865
42,612
2.8
18,914
12,468
17,252
28,483
11,062
38.8
1,071
16,350
16,350
0.2
2012
2,121,396
38.1
918,786
1,030,487
123,996
48,127
2.3
24,108
22,591
14,567
15,994
7,482
46.8
705
7,808
7,808
-52.2
2013
2,421,810
14.2
1,023,115
1,191,085
140,888
66,722
2.8
24,627
25,183
15,290
32,202
12,841
39.9
553
18,808
18,808
140.9
2014
2,644,066
9.2
1,070,857
1,320,642
158,977
93,590
3.5
26,109
19,821
13,998
61,657
21,127
34.3
1,423
39,107
39,107
107.9
2015
2,424,188
-8.3
938,728
1,153,180
236,301
95,978
4.0
30,267
11,805
22,998
76,905
26,085
33.9
2,754
48,066
48,066
22.9
2016E
2,010,703
-17.1
755,257
1,024,601
132,480
98,364
4.9
32,996
8,932
23,207
79,643
26,049
32.7
441
53,153
53,153
10.6
(INR Million)
2017E
2,358,116
17.3
915,811
1,199,131
136,118
107,056
4.5
33,918
8,408
23,374
88,105
28,751
32.6
437
58,917
58,917
10.8
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority interest
Loans
Deferred Tax
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Intangibles
Curr. Assets, L & Adv.
Inventory
Debtors
Cash & Bank Balance
Loans & advances
Other Current Assets
Current Liab. & Prov.
Liabilities
Provisions
Net Current Assets
Less: Miscellaneous exp.
Application of Funds
E: MOSL Estimates
2011
7,231
146,277
153,508
9,975
251,855
13,074
428,412
344,851
152,581
192,269
82,864
84,600
3,855
182,135
28,779
7,971
30,236
56,185
206,051
34,462
64,792
33
428,412
2012
7,231
151,568
158,799
10,351
301,531
16,778
487,459
416,676
174,350
242,326
45,342
78,906
7,556
210,971
52,010
13,263
29,471
98,290
271,434
19,243
113,329
0
487,459
2013
7,231
160,525
167,755
10,766
328,604
16,059
523,184
437,803
198,173
239,630
74,633
74,698
7,584
199,567
43,551
28,498
36,096
91,400
240,795
31,678
126,639
0
523,184
2014
7,231
187,032
194,263
11,603
327,985
12,511
546,362
490,974
222,858
268,115
93,717
69,853
7,684
231,695
45,437
23,113
37,070
110,918
299,307
41,934
106,992
0
546,362
2015
7,231
217,248
224,478
14,358
251,575
12,511
502,922
531,192
253,125
278,067
93,066
104,827
7,684
174,072
36,987
123,727
37,070
44,218
349,107
47,690
19,278
0
502,922
2016E
7,231
251,790
259,020
14,799
230,522
13,799
518,140
546,115
286,121
259,994
133,066
129,827
7,684
142,295
30,445
127,339
37,070
24,218
325,867
47,932
-12,432
0
518,140
(INR Million)
2017E
7,231
290,404
297,635
15,236
207,634
15,995
536,499
557,310
320,039
237,271
178,066
154,827
7,684
164,000
35,034
105,788
37,070
24,218
359,350
48,110
-41,350
0
536,499
28 May 2015
11

BPCL
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
Book Value
Dividend
Payout (incl. Div. Tax.)*
Valuation (x)
P/E
Cash P/E
EV / EBITDA
EV / Sales
Price / Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (No. of Days)
Asset Turnover (x)
Leverage Ratio
Debt / Equity (x)
*Based on standalone
2011
22.6
48.8
212.3
7.0
39.2
36.1
16.8
19.9
0.6
3.8
0.9
11.1
9.5
6.5
4.8
1.6
2012
10.8
44.1
219.6
5.5
35.5
75.7
18.5
18.6
0.4
3.7
0.7
5.0
8.4
7.0
5.6
1.9
2013
26.0
60.1
232.0
11.0
35.2
31.4
13.6
13.6
0.4
3.5
1.3
11.5
11.4
7.2
5.7
2.0
2014
54.1
90.2
268.7
17.0
35.4
15.1
9.1
9.7
0.3
3.0
2.1
21.6
15.2
6.1
5.7
1.7
2015
66.5
108.3
310.4
21.1
35.1
12.3
7.5
7.6
0.3
2.6
2.6
23.0
16.9
6.2
4.7
1.1
2016E
73.5
119.1
358.2
22.0
35.0
11.1
6.9
7.2
0.4
2.3
2.7
22.0
17.3
6.1
3.7
0.9
2017E
81.5
128.4
411.6
24.0
34.5
10.0
6.4
6.6
0.3
2.0
2.9
21.2
18.3
5.1
4.3
0.7
Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest Paid
Direct Taxes Paid
Other operating items
(Inc)/Dec in Wkg. Capital
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free Cash Flow
(Pur)/Sale of Investments
CF from Inv. Activity
Issue of Shares
Net Inc / (Dec) in Debt
Interest paid
Dividends Paid
Other Fi. Activities
CF from Fin. Activity
Inc / ( Dec) in Cash
Net Cash/(Debt) adj. for ST borrowing
Closing Balance
E: MOSL Estimates
2011
28,632
18,914
12,468
-12,475
-13,028
13,489
48,001
-43,057
4,944
38,532
-4,525
0
4,137
-13,967
-6,449
3,278
-13,001
30,475
-22,504
7,971
2012
15,994
24,108
22,280
-6,881
3,946
-40,380
19,067
-42,175
-23,108
19,417
-22,759
0
-14,852
-21,940
-6,502
-493
-43,787
-47,479
60,747
13,269
2013
32,203
24,627
24,737
-9,156
-1,901
-11,273
59,237
-73,776
-14,539
37,763
-36,013
0
42,042
-25,538
-5,028
-19,936
-8,460
14,764
13,734
28,498
2014
61,166
26,109
18,031
-25,665
11,236
4,988
95,865
-72,376
23,489
3,570
-68,806
28
-8,236
-19,556
-9,734
165
-37,333
-10,274
28,498
23,113
2015
76,905
30,267
11,805
-26,085
0
188,328
281,219
-39,567
241,652
-34,974
-74,541
0
-76,410
-11,805
-17,850
0
-106,065
100,614
23,113
123,727
2016E
79,643
32,996
8,932
-24,761
0
35,322
132,133
-54,924
77,209
-25,000
-79,924
0
-21,053
-8,932
-18,611
0
-48,597
3,612
123,727
127,339
(INR Million)
2017E
88,105
33,918
8,408
-26,555
0
7,367
111,243
-56,194
55,048
-25,000
-81,194
0
-22,888
-8,408
-20,303
0
-51,599
-21,551
127,339
105,788
28 May 2015
12

BPCL
Corporate profile: BPCL
Company description
A Fortune 500 company, BPCL has interests in oil
refining and marketing of petroleum products. It is
the third largest refining company in India with a
capacity of 12mmtpa at its Mumbai facility and
9.5mmtpa at Kochi. BPCL has majority stake (63%)
in Numaligarh Refineries, a 3mmtpa refinery in the
north-east. BPCL has investments in IGL (22.5%)
and Petronet LNG (12.5%). BPCL is a public sector
firm in which the government of India holds
54.93%.
Exhibit 28: Sensex rebased
Exhibit 29: Shareholding pattern (%)
Mar-15
Promoter
DII
FII
Others
54.9
12.7
17.2
15.2
Dec-14
54.9
14.0
15.2
15.9
Mar-14
54.9
16.8
11.4
16.9
Exhibit 30: Top holders
Holder Name
BPCL Trust For Investment In Shares
Life Insurance Corporation Of India
HDFC Trustee Company Limited-HDFC Equity Fund
Franklin Templeton Investment Funds
% Holding
9.3
3.8
1.4
1.2
Note: FII Includes depository receipts
Exhibit 31: Top management
Name
S Varadarajan
Designation
Chairman & Managing Director
Exhibit 32: Directors
Name
S Varadarajan
P Balasubramanian
P H Kurian
Neeraj Mittal
Shrikant P Gathoo
*Independent
Name
K K Gupta
B K Datta
B Chakrabarti*
Jayanth Rama Varma*
Exhibit 33: Auditors
Name
CNK & Associates LLP
Haribhakti & Co LLP
Musib & Co
Rohit & Associates
Type
Statutory
Statutory
Cost Auditor
Cost Auditor
Exhibit 34: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
73.5
81.5
Consensus
forecast
58.5
66.4
Variation
(%)
25.6
22.7
28 May 2015
13

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28 May 2015
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