Rs.6100 Crore Solar Project Pushes BPCL Shares Up by 2%

During the early trading hours of 26th December, BPCL (Bharat Petroleum Corporation Limited) saw its share price rise by approximately 2%. This increase followed the company’s selection as the lowest bidder for NTPC’s 150 MW solar PV power project and its announcement of pre-project activities in Andhra Pradesh. What does the new milestone mean for BPCL and its investors? And what is the project all about? Let’s decode.

The Project Announcements:

Bharat Petroleum Corporation Limited (BPCL) announced two significant developments on Tuesday in its exchange filings:

1. The commencement of pre-project activities for a greenfield refinery-cum-petrochemical complex on the East Coast of Andhra Pradesh, with an estimated cost of Rs 6,100 crore. These activities include land identification and acquisition, initial studies, Environment Impact Assessment, the Detailed Feasibility Report preparation, and the development of Basic Design and Front End Engineering Design packages.
2. BPCL became the lowest bidder in NTPC’s reverse auction for 1,200 MW of ISTS-connected solar PV projects across India. Specifically, BPCL was selected as the lowest bidder for a 150 MW capacity out of 1,200 MW. Once finalized, the project will be developed over two years with a capital investment of Rs 756.45 crore. It is expected to generate annual revenue of approximately Rs 100 crore and produce around 400 million units of clean energy. Source: Company Press Releases)

BPCL’s Share Price Trend

After the announcements, the share price of BPCL rose by around 2% during the initial trading hours and reached the day’s highest at Rs.299.30. 

So far, BPCL shares have risen by approximately 30.03% over the past year, surpassing the Nifty 50’s 10.76% gain during the same period. However, the company’s financial performance has not mirrored this share price growth, as it reported a 72% year-on-year decline in Q2 FY25 consolidated net profit, dropping to Rs 2,397 crore. Were other financial aspects on the declining side, too? Let’s take a closer look to find out. 

Overview of BPCL

BPCL is a public-sector company that refines crude oil and markets petroleum products. It operates 82 retail depots and around 20,000 retail outlets across India, holding a market share of approximately 26% in the domestic petroleum market. BPCL is on a growth path and has announced two new petrochemical projects in Bina and Kochi, with a capital investment of ₹54,000 crore by the end of FY2024. These projects aim to take advantage of the integrated refinery and petrochemical operations.

Additionally, BPCL is moving towards becoming a low-carbon energy company. It has invested nearly ₹1,000 crore to establish two 50 MW captive wind power plants and another ₹300 crore in a 72 MWp solar project in Prayagraj. On the other hand, the company’s financial performance shows mixed results, with growth in some areas and challenges in others.

Net Profit:

In FY 2023-24, BPCL reported a net profit of Rs.26859 crore. However, despite a big year-over-year increase, profits moderated to ₹3,015 crore for the first quarter of FY 2024-25. This was mainly due to lower product spreads and unfavorable crude oil prices in international markets.

EPS

The company’s EPS increased from Rs. 126.08 in FY2023 to Rs.126.08 in FY2024, a jump of nearly 1160%.

Revenue

Although BPCL’s revenue has grown over the last three years, it contracted in FY2023-24 to Rs.5,06,993 crore, down 4.98%.

Source: Annual Report

However, the company reported a market sales increase of 3.22% in the first quarter of FY2024-25 as it achieved the highest-ever ethanol blending of 14.4%. 

What Does the Project Mean For BPCL and Its Shareholders?

The recent developments indicate possible growth for BPCL and its investors. These projects align with BPCL’s strategy to increase refining and petrochemical capacity while transitioning towards low-carbon energy. The solar project is part of BPCL’s push into clean energy, reflecting its role in India’s shift towards sustainable energy sources. The capital investment in these initiatives shows the company’s focus on diversifying its portfolio.

For investors, these developments have led to a 2% increase in BPCL’s share price, suggesting a positive market response. Although BPCL’s financial performance has shown mixed results, its diversification into renewable energy, alongside its traditional petroleum business, may offer stability and potential growth moving forward. 

Therefore, before finalizing your investment, you should thoroughly review the company’s growth, expansion plans, and market factors.

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