Bharat Petroleum Corporation vs Grasim Q3 FY24

BPCL reported Q3 FY24 revenue of ₹1,29,976 crore and PAT of ₹3,397 crore, with nine-month PAT at ₹22,449 crore (vs loss last year). Refinery throughput hit 9.86 MMT (100%+ capacity) despite Mumbai shutdown, with GRM of $13.35/bbl (premium to Singapore). Russian crude accounted for 40% of imports, discounts stable. Marketing sales grew 5.1% Apr-Dec, market share in petrol/diesel improved. Management outlined Project Aspire with ₹1.5-1.7 lakh crore capex over 5 years, targeting net zero by 2040. Key projects: Bina refinery expansion (7.8 to 11 MMT) and Kochi polypropylene unit (₹5,044 crore). Mozambique LNG restart expected by mid-2024. Risk: volatility in crude prices and petchem margins due to global demand weakness.

Guidance read

Capex of ₹1.5-1.7 lakh crore over 5 years: Planned capital outlay includes ₹75,000 crore for refineries/petchem, ₹32,000 crore upstream, ₹25,000 crore each for gas and marketing, ₹10,000 crore for renewables. Rights issue to be completed by March 2024: Board approved rights issue; management aims to complete within current financial year (FY24). Mozambique LNG restart by mid-2024: Force majeure expected to be lifted around June/July 2024; work to commence shortly after. Petrol demand growth 4-5%, diesel 1.5-2% over 5 years: Management expects MS growth of 4-5% and HSD growth of 1.5-2% CAGR over next 5 years despite EV adoption.

Risk read

Key risks include Crude price volatility and marketing margins — Crude oil prices range-bound $80-90/bbl; marketing margins could turn negative if prices spike above $85/bbl.; Petchem margins under pressure from Chinese demand — Polypropylene margins remain negative due to weak Chinese demand; recovery uncertain.; Red Sea disruptions impacting crude sourcing — While currently covered till April, prolonged Red Sea tensions could raise shipping costs and narrow Russian crude discounts.; High capex may strain balance sheet — Peak debt-equity expected at 1x; returns from large projects (Bina, Mozambique) will take 4-5 years to materialize..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

Grasim's Q3 FY24 consolidated revenue grew 12% YoY to INR 31,965 crore, with EBITDA up 34% to INR 5,150 crore, driven by volume growth in VSF (34%) and caustic soda (5%), though realizations remained weak due to global oversupply. Standalone revenue was INR 6,400 crore (+3% YoY). The paints business (Birla Opus) is on track for launch in Q4 FY24 with trial production at three plants, targeting pan-India distribution by FY25 end. B2B e-commerce Birla Pivot achieved INR 120 crore monthly revenue run-rate. VSF margins are expected to bottom out, while chemicals remain stable to gently improving. Risks include continued pressure from cheap Chinese imports and Red Sea disruptions impacting export trade.

Guidance read

Paints launch in Q4 FY24 with pan-India distribution by FY25 end: Birla Opus will launch in Q4 FY24 starting with North and South India, targeting national distribution by end of FY25. Net debt-to-EBITDA to reach 3-3.5x post paints capex: Management guided net debt-to-EBITDA of 3-3.5x after completing paints capex and rights issue proceeds. Capex guidance of INR 5,900 crore for FY24: Management reiterated plant capex guidance of about INR 5,900 crore for FY24, with 76% allocated to paints.

Risk read

Key risks include Cheap Chinese imports impacting VSF realizations — VSF realizations declined 2% QoQ due to cheaper imports from China, pressuring margins.; Red Sea disruptions affecting global trade — Red Sea disruptions are impacting 12-15% of world trade, including 30% of container traffic, creating uncertainty for export markets.; Chlorine pricing remains negative due to agrochem slowdown — Chlorine realizations worsened by INR 2,000 sequentially to negative INR 4,000, driven by slow agrochem demand.; Paints business losses increasing ahead of launch — Paints EBITDA losses increased QoQ as uncapitalized expenses rise; profitability timeline remains uncertain..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.