Heavy capex load a drag on Bharat Petroleum's refining muscle

State-run refiner Bharat Petroleum Corporation (BPCL) reported operating and net profits below expectations in the first quarter (Q1) of 2025-26 (FY26), weighed down by lower gross refining margins (GRMs) of $4.9 per barrel.

- DEVANGSHU DATTA

However, blended marketing margins at ₹8.3 per litre were 75 per cent higher year-on-year (Y-o-Y).

Refining throughput and marketing volumes were in line with estimates. The Union Cabinet has approved ₹30,000 crore in liquefied petroleum gas (LPG) compensation for oil marketing companies, to be paid in 12 tranches over an undisclosed timeframe. BPCL's share will be roughly 25 per cent, or around ₹7,500 crore. Analysts conservatively assume the company will receive about half that amount in this financial year (FY-26), which could lift book value per share by around 5 per cent.

Marketing margins for motor spirit (MS) and high-speed diesel (HSD) have recently eased to an average of ₹11.3 per litre and ₹6.7 per litre, respectively, in the second quarter (Q2), compared with ₹12.7 and ₹11 per litre in Q1. Even so, they remain high in absolute terms.