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Bharat Petroleum Corporation Limited (BPCL), a state-owned oil retailer, experienced a significant decline in its consolidated net profit for the second quarter of the financial year 2024-25. The company reported a 72 percent year-on-year drop, reaching Rs 2,297 crore, primarily attributed to reduced refining margins and lower cracks. This stark contrast compared to the Rs 8,243 crore profit recorded in the same period during the previous year. Sequentially, the net profit also saw a 19 percent dip, as reported on October 25th.
Despite the profit plunge, BPCL's revenue from operations remained relatively stable, registering at Rs 1.18 lakh crore, only slightly higher than the Rs 1.17 lakh crore recorded in the previous year. This indicates a challenging scenario where the company faced a substantial decrease in profitability despite maintaining a similar level of operational activity. The impact of weak refining margins is clearly evident, as the company's average gross refining margin (GRM) for the half-year ending September 30 was $6.12 per barrel, a stark decline compared to the $15.42 per barrel recorded in the previous year.
In response to these financial challenges, BPCL's board decided to forgo pursuing capital raising through a rights issue. This decision was based on an improved internal generation of funds and communication received from the Ministry of Petroleum and Natural Gas (MoP&NG) regarding the non-allocation of funds for capital support of Oil Marketing Companies (OMCs) in the budget for 2024-25. Consequently, the Government of India will not be participating in the rights issue. This decision indicates BPCL's strategy to rely on internal resources and adjust to the current economic environment rather than seeking external capital.
Source: BPCL Q2 results: Net profit falls 72% to Rs 2,297 crore on account of weak refining margins