Oil & Gas Q3 previews: GAIL, BPCL's PAT, revenue likely to decline. Key factors to watch out for
3 min read . Updated: 29 Jan 2023, 10:10 AM IST
Premium- The Q3 is likely to be operationally better for BPCL but sequentially will be under pressure owing to diesel marketing loss. Meanwhile, GAIL's profitability are likely to drop on lower LPG realization and gas trading.
Among the major oil and gas companies, BPCL and GAIL (India) are the next to announce their December 2022 quarterly earnings on Monday. The Q3 is likely to be operationally better for BPCL but sequentially will be under pressure owing to diesel marketing loss. Meanwhile, GAIL's profitability are likely to drop on lower LPG realization and gas trading.
Last week, on Friday, BPCL shares closed at ₹336.70 apiece lower by 2.86% on BSE. GAIL shares finished at ₹99.15 apiece down by 1.83%.
BPCL Q3 preview:
In its preview report, ICICI Direct said, BPCL's crude throughput is expected at 8.9 MMT, flat QoQ. Marketing segment volumes are expected to increase 3.3% QoQ. GRMs are expected at US$12/bbl, down US$4.8/bbl QoQ taking into account individual product crack trend and inventory losses. On the marketing front, the brokerage expects losses to narrow down due to fall in crude prices.
BPCL's marketing segment(42.5 MMT) is larger than its refining segment (30.1 MMT). ICICI Direct's note added, "We estimate an EBITDA of ₹3,098.8 crore, up 116% QoQ." However, the brokerage expects BPCL's revenue to be at ₹1,17,980.8 crore down by 0.5% YoY and 8.1% QoQ, and PAT at ₹1,378.5 crore lower by 44% YoY.
Meanwhile, as per Kotak Institutional Equities, BPCL's EBITDA to sharply recover sequentially, driven by (1) lower under-recoveries on auto fuels; (2) elevated middle distillate cracks; and (3) marginal gains from export tax. But the brokerage assumes --- reported refining margins of $15/bbl; (2) crude throughput to inch up 5% qoq to 9.3 mmt; (3)under-recoveries of nearly Rs28 billion; and (4) inventory loss of nearly Rs7 billion with a loss of US$1/bbl in refining and $0.2/bbl in marketing business.
While Prabhudas Lilladher's note said, BPCL is likely to report operationally better results but without subsidies, losses will be higher QoQ due to diesel marketing loss.
In the September 2022 quarter, BPCL's net loss narrowed sharply to ₹338.49 crore versus a loss of ₹6,147.94 crore in the previous quarter. Consolidated revenue stood at ₹1,28,355.72 crore up by 25.91% YoY but lower by 7.27% QoQ. BPCL's market sales for the half year that ended September 30, 2022, was at 23.20 MMT as compared to 19.54 MMT in the corresponding period a year ago. The sales were driven by MS-Retail (24.70%), HSD-Retail (29.78%), and ATF (97.72%).
GAIL (India) Q3 preview:
In regards to GAIL, ICICI Direct's preview note said, "on the gas business front, transmission volume is expected to remain flat QoQ due to supply disruption to 108.5 mmscmd with its EBIT at ₹769.8 crore. For the gas trading segment too, we expect volumes to be flat QoQ to 93 mmscmd with its EBIT at ₹510.4 crore. On the LPG/LHC front, EBIT is expected to decline 4% QoQ to ₹477.7 crore due to lower realisation while petchem segment is expected to report EBIT loss of ₹225.3 crore. We expect an EBITDA of ₹1849.7 crore, up 5% QoQ."
But the brokerage expects GAIL's revenue at ₹36,395.6 crore in Q3FY23 up by 41.2% YoY but lower by 5.4% QoQ. PAT is factored at ₹1,201.9 crore declining by 63.4% YoY and 21.8% QoQ.
Kotak expects a 58% yoy decline in EBITDA (but flat qoq) by GAIL as each key segment faced headwinds -- (1) transmission impacted by lower volumes, reduced APM allocation and high APM gas price; (2) LPG impacted by declining LPG prices, and higher APM gas costs; and (3) petchem by reduced gas availability, leading to lower plant utilization, declining PE prices, and higher gas prices.
Further, Kotak assumes for GAIL -- (1) a 2% qoq decline in gas transmission/marketing volumes to 106 / 91 mmscmd; (2) a 7% qoq decline in PE realizations to Rs116/kg; and (3) a 11% qoq decline in LPG/LHC realizations to Rs54/kg.
Prabhudas expects GAIL's earnings to drop in Q3 due to lower LPG realization ($70/ton) and gas trading.
During Q2 of FY23, GAIL posted a 46.31% YoY and 47.27% QoQ decline in net profit to ₹1,537.07 crore, on the contrary, revenue stood at ₹38,490.89 crore up by 78.90% YoY and 2.45% QoQ. EBITDA stood at ₹1,765 crore in Q2FY23 which fell by 59.4% compared to ₹4,348 crore witnessed in the same quarter a year ago.
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