Bharat Petroleum Corporation Ltd Q4 FY26 Earnings Call: Guides Rs. 25,000 Cr Capex for FY27, Record Refinery Throughput of 41.15 MMT

Bharat Petroleum Corporation Ltd held its Q4 FY26 earnings call on May 12, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Throughput and Resilient Sales Amid Geopolitical Turbulence

• Record refinery throughput of 41.15 MMT— achieved at 116% utilization in FY 2025-2026, despite the ongoing West Asia conflict and Strait of Hormuz disruption impacting global energy supply chains.
• Gross Refining Margin (GRM) of $11.74/bbl— reported for FY 2025-2026; management declined guidance for April-May FY 2026-2027 trends citing daily volatility in crude, premium, freight, and product prices.
• Domestic sales volume of 54.18 MMT— up 3.5% YoY in FY 2025-2026, led by petrol at +5.7%, diesel at +1%, and ATF at +11.4%.
• Retail market share of 30.02% for MS and 29.61% for HSD— recorded in April 2026 (Q1 FY 2026-2027); management aims a long-term target of ~32% retail share over the next couple of years (FY period unspecified), driven by network expansion and customer convenience.
• Gas business volume grew 26.5% to 2.29 MMT— in FY 2025-2026, with CNG volumes surging 62.1%.
• Q1 FY 2026-2027 expected to be challenging— management noted the full war impact was not realized in Q4 FY 2025-2026 due to timing differences.

GRM Held at $11.74/bbl; Elevated Crude Differentials and LPG Under-Recovery Weigh

• Landed crude cost of ~$120-122/bbl— as of May 2026 (Q4 FY 2025-2026), when Brent was ~$110/bbl, reflecting elevated premiums, freight, and insurance.
• Landed vs benchmark differential of $10-12/bbl— in Q4 FY 2025-2026, versus a pre-war premium of $4-5/bbl for WTI over Brent; at the peak of the conflict, certain cargoes saw premiums of $20-25/bbl over Brent.
• Russian crude discount has disappeared— in early FY 2026-2027, Russian crude is now at a premium, versus a discount of $6-8/bbl in FY 2025-2026 (down from $12-13/bbl earlier).
• Non-auto fuel marketing margins of 4-5% of sale price— for products such as bitumen, petcoke, and naphtha, based on import parity pricing with no significant change from pre-war levels (Q4 FY 2025-2026 period).
• LPG under-recovery cited at Rs.676/cylinder— analyst cited a peer-reported figure; Saudi CP at $800/ton but landed cost is higher due to elevated freight (world scale from 50-55 pre-war to 600-700 now) and spot premiums of $200-300 on US cargoes.
• Refinery fuel & loss percentages for Q4 FY 2025-2026— Kochi 6.48%, Mumbai 5.64%, Bina 9.01%; year-on-year variation is typically 0.2-0.3%.

Russian Crude Share Rises to ~41%; Hormuz Strait Risks Acknowledged

• Russian crude processing share of 31% in Q4 FY 2025-2026— up from 25% in Q3 FY 2025-2026; early FY 2026-2027 offtake rose to ~40-41% as spot supply is mostly Russian grades.
• BPCL buys Russian crude exclusively from non-sanctioned entities— management clarified "Russian crude is not sanctioned – only entities are"; waiver period extended to mid-June 2026, after which purchases can only be from non-sanctioned entities; no shortfall is expected.
• Crude inventory of 27 days as of late May 2026— within the normal 25-27 day range; management avoids exceeding 30 days due to storage constraints.
• Product inventory of 24 days at end-March 2026— slightly below 25 days at end-March 2025 (FY 2024-2025); LPG inventory coverage typically runs 15-20 days, varying with cargo receipts.
• At least four new crude grades tested— Venezuela, Brazil, Angola, and WTI; smaller cargoes such as Venezuelan crude are blended with other grades to optimize refinery profitability, with distillate yields changing but offering commercial benefit.
• Full impact of Strait of Hormuz disruption expected in Q1 FY 2026-2027— management acknowledged the conflict significantly impacted supply chains and crude price volatility towards the end of FY 2025-2026.

Rs.25,000 Cr Capex Target for FY27; Bina and Petrochemicals at Core

• FY 2025-2026 capex of ~Rs.20,400 crore— FY 2026-2027 target of Rs.25,000 crore (may reach Rs.26,000-27,000 crore), broken down as: Rs.11,000 crore for Bina refinery and petrochemical projects (including polypropylene at Kochi and PRU at Mumbai), Rs.10,000 crore for marketing initiatives, Rs.2,250 crore equity infusion into BPRL, and Rs.1,700 crore for CGD network expansion.
• Bina petrochemical complex project cost of Rs.49,800 crore— 23% progress achieved (vs. planned 32%) due to geopolitical and supply chain challenges; Rs.4,700 crore incurred and Rs.25,400 crore committed; management expects completion within approved cost ±10%.
• Kochi polypropylene project cost approved at Rs.5,000 crore— (±10%), with 85-90% already awarded; no price escalation expected.
• Andhra Pradesh refinery-cum-petrochemical project (9 MMT capacity)— preparatory activities progressing, supported by strong incentives from the Government of Andhra Pradesh.
• Mozambique LNG project 42% complete— management stated "first LNG expected mid‑2028 (FY 2028-2029)"; BPCL holds a 10% stake with no future equity commitment as the phase is project-financed.
• Brazil IBV JV: first oil now expected FY 2031-2032— impairment of Rs.200-300 crore booked in Q4 FY 2025-2026 for the Brazil upstream block due to a 1.5-2 year project delay; total project capex of US$6.4 billion with BPCL's 40% share requiring remaining contribution of ~US$1.2 billion over 3-4 years (by ~FY 2029-2030).
• Renewable energy capacity target of 2 GW— largely dedicated to captive refinery consumption to improve returns (~8-9%) and support net-zero goals.

Debt/Equity at 0.11x Standalone; LPG Negative Buffer of Rs.12,319 Cr

• Debt/equity ratio of 0.11x (standalone) and 0.25x (consolidated)— as of March 2026 (FY 2025-2026 end); management targets a peak debt/equity of 1:1 for large projects, normalizing to 0.4-0.5x post-commissioning with an 80-90% cash payback within 4-5 years.
• LPG compensation negative buffer of Rs.12,319 crore— as of March 2026 (FY 2025-2026 end), after receiving Rs.7,594 crore in five installments from the Government of India.
• No balance sheet stress as of March 2026— management confirmed under-recoveries during March were absorbed; current under-recovery levels can be absorbed for a "limited period", but no balance sheet can bear the cash-flow mismatch indefinitely without price revisions.
• Management expects government support for LPG under-recoveries— for petrol/diesel, current under-recoveries are seen as a short-term challenge, with normalization expected by July/August 2026 post Hormuz Strait disruption resolution.
• Foreign currency borrowings "very minimal"— treasury monitors cash flows and sources funds at competitive rates; short-term borrowing stress possible from cash flow mismatch due to Middle East disruptions, but no major debt/equity jump foreseen at FY 2026-2027 year-end.

Near-Term Uncertainty, Long-Term Confidence in Integrated Model

• Management declined forward guidance on margins and pricing— citing daily volatility in crude, premium, freight, insurance, and product prices; no comment on returning to daily price revisions for petrol/diesel, stating pricing decisions are taken by the industry collectively.
• Under-recoveries absorbable for a "limited period"— if the environment continues longer, management indicated some solution (price revision / burden sharing among stakeholders) must occur to sustain cash flows for future capex.
• No review of already announced capex projects— even if current stress continues; long-term, prices are expected to normalize.
• Management acknowledged near-term market volatility— but expressed confidence in BPCL's integrated operating model and resilient balance sheet to navigate the evolving energy landscape.
• BPCL celebrating its 50th foundation year— management reaffirmed long-term strategy, execution capabilities, and alignment with the Government of India's Aatmanirbhar Bharat vision, continuing to strengthen domestic energy infrastructure.