BPCL vs HPCL: Today every swipe we make we receive updates on the next big things and industries of the future. These include Ev’s, data centers, solar energy, etc.
But are traditional investments like refining still viable? Here we compare BPCL vs HPCL across various metrics. Keep Reading to find out!
Industry Overview – Oil and Gas Industry
Despite being an open fact that the industry will one day be phased out the reliance already makes it an ardent task for the next decade. Instead, the oil demand in India is expected to double to reach 11 million barrels by 2045.
Currently, diesel and gasoline the most used oils are expected to cover 58% of India’s total oil demand. Natural gas in India is expected to have an average annual growth of 9% until 2024.
Business Overview – BPCL vs HPCL
|Face value (₹): 10||Net profit margin:3.11%|
|Market cap (Cr.): ₹ 70,902||Current ratio: 0.69|
|Promoter’s Holdings (%) 53||Debt to equity:1.24|
|Stock P/E (TTM) : 24.3||ROE (%) 20.4%|
|EPS (₹): 12.3||Dividend yield (%) 4.89|
Bharat Petroleum Corporation Ltd. is a state-run oil refinery that has its roots back in the colonial period of 1891. The company is currently under the ownership of the Ministry of Petroleum and Natural Gas.
It is India’s 2nd largest downstream state oil corporation. The company is a Maharatna Public Sector undertaking. Today the company’s businesses include Bharatgas, MAKLubricants, Fuels and Services, Aviation, refinery, etc.
|Face value (₹): 10||Net profit margin:2.05%|
|Market cap (Cr.): ₹ 33,754||Current ratio: 0.62|
|Promoter’s Holdings (%) 54.9||Debt to equity:1.17|
|Stock P/E (TTM): NA||ROE (%) 18.1%|
|EPS (₹): -23||Dividend yield (%) 5.91|
This state-run entity finds its roots back in 1910. Today the company is a subsidiary of ONGC which is also under the ownership of the Ministry of Petroleum and natural gas.
The company currently holds a 25% market share amongst Indian public sector undertakings. A lesser-known fact, HPCL was the first PSE to be listed on the BSE.
Their businesses include refining, retail, lubricants, aviation, etc.
Financial Metrics – BPCL vs HPCL
In FY22, HPCL earned a revenue of Rs 3,49,913 Cr and BPCL earned a revenue of Rs 3,46,791 Cr. Since there is a huge difference in the size of the company, comparing their annual revenues would not paint a clear picture.
Here let us take a look at the potential offered by the two companies through their ability to increase revenues over the last few years.
Over the past five years, HPCL has achieved a revenue growth of 13% and BPCL has a revenue growth of 12%. This gives HPCL a slightly better edge than BPCL in terms of revenue growth.
In FY22, HPCL and BPCL had an increase in their net profit by 4 times and 5 times. But for FY22, their profits have fallen by 31.6% and 27.73% and their current profitability stands at Rs 7,294 Crs and Rs 11,682 Crs.
Over the past five years, HPCL has a profit growth of negative 3% and BPCL has a profit growth of 4%. This gives BPCL better edge in terms of profitability
Returns and Valuation
As of 2022, HPCL has provided a ROCE and ROE of 18.1% and 11.6% respectively. BPCL has provided returns of a ROCE and ROE of 20.4% and 15.6%.
The PE for FY22 for HPCL and BPCL stand at 5.24 and 6.54 making them undervalued compared to the PE of the industry
In this article, we compared two very similar companies HPCL vs BPCL on various metrics. While investing in the industry despite many forecasts in its favor, investors must make note of the disruptive nature of electricity and other green energy.
The major determining factor here will be the speed of acceptance of these alternatives across India. That’s all for this post, let us know which company you would pick in the comments below. Happy Investing!
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
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