Bharat Petroleum Corporation Ltd (BPCL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (Antique Stock Broking Limited): Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited Q2 FY '27 Earnings Conference Call, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Varatharajan. Thank you, and over to you, sir.
Varatharajan (Antique Stock Broking Limited): Thank you, Nazneen. Very good morning, ladies and gentlemen. It's my pleasure to welcome all the participants on the call, and the BPCL management to the 2Q FY '27 call of BPCL. We have with us Mr. V.R.K. Gupta, Director Finance, Mr. Pankaj Kumar, ED, Corporate Finance, Mr. Ashish Goyal, CGM Corporate Treasury, Ms. Anisya Vettickal Tomkaran, DGM Finance, Mr. Bala Girish, Senior Manager Finance, Bharat Petroleum Corporation. I'd like to hand over to Mr. Bala Girish for the disclaimer.
Bala Girish (Bharat Petroleum Corporation Ltd): Thank you Mr. Varatharajan. Good morning, and on behalf of the BPCL team, I welcome you all to this post Q2 results concall. Before we begin, I would like to mention that some of the statements that we'd be making during this concall are based on our estimates of the matter and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. Since this is a quarterly results review, please restrict your questions to the Q2 results. I now request our Director of Finance, Mr. V.R.K. Gupta, who is leading the BPCL team for this call to make his opening remarks. Thank you and over to you, sir.
V.R.K. Gupta (Bharat Petroleum Corporation Ltd): Good morning everyone and thank you for joining us today. As you are aware, our quarter
V.R.K. Gupta (Bharat Petroleum Corporation Ltd): gives for another.
V.R.K. Gupta (Bharat Petroleum Corporation Ltd): Let me begin by putting the quarter in context, particularly, how the operating environment evolved since we last spoke. When we met in July, the energy markets were under significant stress due to the escalation of the West Asia crisis, which had a considerable impact on our quarter one performance. As the tensions showed some signs of easing at the time, we were hopeful that the opening environment would gradually stabilize. However, quarter two unfolded quite differently. The quarter began on a relatively calm note with Brent crude at around $70 per barrel from mid-July. However, geopolitical tensions intensified, pushing crude prices above $90 per barrel by August. The situation escalated further in September, following attacks on Saudi export infrastructure and tankers, with Brent averaging around $116 per barrel during this month. Tensions around the Strait of Hormuz and the Red Sea also remained elevated. While we continued to secure supplies without disruption, the escalation kept crude premiums and freight costs at elevated levels. Against this challenging backdrop, strong diesel and ATF cracks supported refining economics, while lower LPG under-recoveries provided some relief to marketing margins during the quarter. At the same time, the rupee remained under pressure, averaging around 95.6 against US dollar, adding to the cost of our dollar-denominated imports. Through all this volatility, our priorities remained clear. We stayed focused on our four things: securing supplies, serving our customers without disruption, protecting shareholder value, and maintaining momentum on our growth program. Let me start with sourcing. Our spot crude share remained at around 67% in Q2, while Russian grades accounted for approximately 37% of our total crude procurements, both broadly in line with previous quarter. As flows from Middle East improved, we progressively restored sourcing from the region, while retaining the flexibility and diversification we had built during Q1. I am also pleased to share that our efforts to strengthen our international crude sourcing capabilities have began to yield results. BPCL became the first in the industry to leverage sourcing opportunities from inside the Strait of Hormuz at a price advantage. This was achieved through our International Crude Desk in Singapore, which commenced operations in September 2026. This marks an important step in strengthening our global sourcing capabilities and improving our ability to respond quickly to opportunities in an increasingly dynamic crude market. As of 30th September, we held around 22 days of crude inventory, and importantly, our crude sourcing requirements are tied up through December 2026. Moving to LPG. Despite disruption to traditional supply routes, we maintained domestic availability through a more diversified import portfolio. Supplies from the Arab Gulf improved during the quarter, while US-origin cargoes accounted for around 48% of our total LPG imports in Q2. Currently, we are holding 32 days of LPG inventory, including in-transit. On LNG, disruptions to our long-term supply contracts required us to actively diversify our sourcing. We secured alternative spot supplies from the US, Oman, and West Africa, supported by flexible logistics arrangement to bridge supply gaps despite elevated market prices. Coming to refining, our refineries continued to deliver a superlative operational performance during the quarter. We achieved a throughput of 10.4 million metric ton in Q2, with overall capacity utilization at 117%. Our gross refining margin stood at $32.53 per barrel, and after adjusting SAED, the GRM was around $14 per barrel. Distillate yield remained strong at 84.38%. Moving to marketing, our domestic sales volumes stood at 13.47 million metric ton in Q2 compared to 13.62 MMT in Q1. We continued to strengthen our retail network, taking the number of outlets to 25,592 compared with 25,485 at the end of Q1. At the same time, we continued to build our premium fuel and nonfuel portfolio. Speed 97 conversion stood at 5.21% during the quarter. Speed 100 is now available at 162 outlets, and our BeCafé network has expanded to 234 locations. On LPG, we commissioned our Mathia LPG plant in Golaghat, Assam, our first LPG bottling plant in the state, with a capacity of 30 TMT per annum. This is an important step towards strengthening our LPG infrastructure
V.R.K. Gupta (Bharat Petroleum Corporation Ltd): military vehicles operating reliably in extreme winters and at high altitudes. The first rake was dispatched from Bina in August. For us, this is more than just a new product. It demonstrates what we can achieve when innovation and technological capability come together in support of national priorities. Our gas business maintained strong growth momentum. Bulk gas achieved a record H1 sales performance of 979 TMT, registering 53% year-on-year growth, while CGD sales reached 177 TMT, growing 65% year-on-year. The recently announced GOBARdhan scheme has made CBG projects increasingly attractive, and we are actively pursuing these opportunities through both our own plans and joint ventures. Additionally, our CBG blending reached 6.5% in H1, more than double the mandated target of 3%. Coming to LPG compensation, the softening of Saudi CP prices during Q2 provided some relief on under-recoveries. Average under-recovery declined to around Rs. 290 per cylinder in Q2 compared to Rs. 507 per cylinder in Q1. As of 30th September, the cumulative buffer stood at Rs. 17,334 crore after adjusting for Rs. 3,796 crore of compensation received during the first half. For future, we remain hopeful of that government's continued support to OMCs toward domestic LPG compensation. Let me now brief on our growth program. Our capex program remains on track, and since we last spoke, our key projects have continued to make steady progress. As of September '26, our Bina petrochemicals and refinery expansion project has reached 40.2% progress, while the polypropylene project at Kochi has reached 55%. The PRUCC project at Mumbai is also progressing. We have also taken an important step in our sustainable aviation fuel journey. In October, we signed India's first co-processing licensing agreement for our SAF project at Mumbai refinery. Phase 1 involves revamping the existing kerosene hydrotreater unit and is targeted for commissioning by January 2027. This positions us well for India's SAF blending requirement for international flights, beginning at 1% in 2027 and progressively increasing to 5% by 2030. On the Andhra Pradesh refinery and petrochemical complex, I am pleased to share that on Friday, our board approved the incorporation of a wholly-owned subsidiary as a dedicated project company with an initial authorized share capital of up to Rs. 4,900 crore, subject to requisite approvals. The dedicated project company will facilitate swift due diligence, lender engagement and development of the financing and partnership structures. The detailed feasibility reports are in their final stages, following which the financial investment decision will be taken shortly. Moving to our upstream portfolio, the Mozambique project continues to progress steadily, reaching 47% completion as of September 2026, with gas production expected by mid-2028. In Brazil, following the award of the FPSO tender in May 2026, the BMC-11 project is also progressing in line with planned timelines. Overall, against our FY '26-'27 capex target of Rs. 25,000 crore, we have incurred Rs. 13,749 crore during the first half, including Rs. 9,300 crore in Q2. Now, coming to our financial performance, revenue from operations for the quarter stood at Rs. 1.5 lakh crore, with a standalone profit after tax of Rs. 4,993 crore. For the first half, standalone profit after tax stood at Rs. 1,031 crore. On a consolidated basis, profit after tax for Q2 stood at Rs. 4,863 crore, while profit for the first half was Rs. 2,919 crore. Despite the challenging operating environment, our Q2 performance demonstrates the resilience of our integrated business model. The quarter benefited from our agile sourcing strategy, robust refining performance and a reduction in marketing and LPG under-recoveries. Our balance sheet also remains strong. Standalone gross borrowings reduced to Rs. 15,246 crore as of 30th September compared with Rs. 17,396 crore at the end of June. The standalone debt equity ratio improved to 0.16 from 0.19 in Q1. Our borrowings net of short-term investment stood at Rs. 7,106 crore as against Rs. 4,800 crore in Q1. As we enter the second half of the year, the external environment continues to remain uncertain. However, our performance in Q2 demonstrates our ability to adapt quickly and operate with resilience through periods of significant turbulence. We remain confident in BPCL's ability to ability to navigate near-term volatility while building long-term value. With that, I will conclude my brief on our Q2 performance and will be happy to take your questions. Thank you.
Moderator (Antique Stock Broking Limited): Thank you very much. We will now begin the question and answer session. Anyone who
Moderator (Antique Stock Broking Limited): to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator (Antique Stock Broking Limited): The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Probal Sen (ICICI Securities): Thank you for the opportunity, sir, and congratulations on a good set of numbers. A few questions, firstly you talked about the crude sourcing mix for the second quarter, spot crude at 67 odd percent and Russia at 37%. Just wanted to get a sense, given that Middle East crude flows have improved, as you mentioned, have we seen any material change in that mix in the month of October so far? And what How are we looking at the mix till December when you said you already have crude tied up till at least the end of December?
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