Bharat Petroleum Corporation vs TATA CONSUMER PRODUCTS 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.

Tata Consumer Products delivered a strong Q3 FY24 with consolidated revenue growth of 9% and EBITDA expansion of 190 bps. India beverages saw tea volume growth of 2% (fourth consecutive quarter of positive volume), while India foods grew 5% volume and 13% revenue. Growth businesses (Sampann, NourishCo, Soulfull, Yumside) surged 42%, now contributing 17% of India business. International business recorded 11% revenue growth with EBIT up 23%. The company closed the Capital Foods acquisition and expects to close Organic India within 45-60 days, targeting integration within 100 days. Management guided for NourishCo to reach INR 900-1,000 crore for FY24 and aims to grow the contribution of growth businesses to 30% with 30% growth post-acquisitions. Risks include U.S. coffee category softness and volatility in coffee prices, which could pressure international margins.

Guidance read

NourishCo to achieve INR 900-1,000 crore revenue in FY24: Management remains confident of delivering INR 900-1,000 crore for NourishCo in FY24, despite Q3 being seasonally weak. Growth businesses contribution to reach 30% growing at 30%: With the addition of Capital Foods and Organic India, management targets growth businesses to contribute 30% of India business, growing at 30%. Integration of Capital Foods and Organic India within 100 days: Capital Foods front-end integration substantially complete; Organic India expected to close in 45-60 days, with full integration within 100 days. International margins to be accretive to India business: Management expects international business margins to improve and become accretive to overall margins, with U.S. showing progress in 6-12 months.

Risk read

Key risks include U.S. coffee category softness and price volatility — The U.S. coffee category is under demand pressure, and coffee prices remain volatile, impacting the branded coffee business.; Portfolio complexity from multiple brands — Analyst raised concern about overlapping brands (e.g., Sonnets vs Sampann, Himalayan vs Sonnets honey) potentially causing confusion and bandwidth drag.; Integration risks from recent acquisitions — While integration is progressing, there could be hiccups in distributor transition and inventory cleanup for Capital Foods and Organic India..

Promise ledger

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