Bharat Petroleum Corporation Analysis

dividend

Pros

• Dividends after 3 years are expected to be well covered by earnings (2.4x coverage).

Cons

• Unable to calculate sustainability of dividends as Bharat Petroleum has not reported any payouts.
• Unable to evaluate Bharat Petroleum's dividend yield against the bottom 25% of dividend payers as the company has not reported any payouts.
• Unable to evaluate Bharat Petroleum's dividend against the top 25% market benchmark as the company has not reported any payouts.

future

Pros

• Bharat Petroleum's earnings are expected to grow significantly at over 20% yearly.
• Bharat Petroleum's earnings growth is expected to exceed the India market average.
• Bharat Petroleum's earnings growth is expected to exceed the low risk savings rate of 7.2%.
• Bharat Petroleum's earnings are expected to exceed the low risk growth rate next year.
• Bharat Petroleum's earnings are expected to increase by more than the low risk growth rate in 3 years time.
• Bharat Petroleum's net income is expected to increase by more than 50% in 2 years time.
• Bharat Petroleum is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
• Performance (ROE) is expected to be above the current IN Oil and Gas industry average.
• An improvement in Bharat Petroleum's performance (ROE) is expected over the next 3 years.

Cons

• Cash flow for Bharat Petroleum is expected to increase but not above the 50% threshold in 2 years time.
• Bharat Petroleum's revenue is expected to decrease over the next 2 years.
• Bharat Petroleum's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
• Bharat Petroleum's revenues are expected to decrease over the next 1-3 years, this is below the India market average.

health

Pros

• Bharat Petroleum is profitable, therefore cash runway is not a concern.
• Bharat Petroleum is profitable, therefore cash runway is not a concern.
• Debt is well covered by operating cash flow (20.2%, greater than 20% of total debt).

Cons

• Bharat Petroleum's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
• Debt is not covered by short term assets, assets are 0.7x debt.
• Bharat Petroleum's long term commitments exceed its cash and other short term assets.
• The level of debt compared to net worth has increased over the past 5 years (106.7% vs 159.8% today).
• Interest payments on debt are not well covered by earnings (EBIT is 2.3x annual interest expense, ideally 3x coverage).
• Bharat Petroleum's level of debt (159.8%) compared to net worth is high (greater than 40%).
• High level of physical assets or inventory.

management

Pros

• D.'s remuneration is lower than average for companies of similar size in India.
• The tenure for the Bharat Petroleum management team is about average.

Cons

• The average tenure for the Bharat Petroleum board of directors is less than 3 years, this suggests a new board.
• D.'s compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

misc

Pros

Cons

• Bharat Petroleum has significant price volatility in the past 3 months.

past

Pros

Cons

• Bharat Petroleum's 1-year earnings growth is negative, it can't be compared to the 5-year average.
• Bharat Petroleum's year on year earnings growth rate was negative over the past 5 years and the most recent earnings are below average.
• Bharat Petroleum used its assets less efficiently than the IN Oil and Gas industry average last year based on Return on Assets.
• Bharat Petroleum's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).
• Bharat Petroleum has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
• Bharat Petroleum's 1-year earnings growth is negative, it can't be compared to the IN Oil and Gas industry average.

value

Pros

• Bharat Petroleum is good value based on expected growth next year.
• BPCL outperformed the Market in India which returned -14.5% over the past year.
• NSEI:BPCL is up 13.1% outperforming the Oil and Gas industry which returned 10.5% over the past month.
• NSEI:BPCL is up 13.1% outperforming the market in India which returned 8% over the past month.

Cons

• Bharat Petroleum's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).
• Bharat Petroleum's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).
• Bharat Petroleum is overvalued based on assets compared to the IN Oil and Gas industry average.
• Bharat Petroleum is overvalued based on earnings compared to the IN Oil and Gas industry average.
• Bharat Petroleum is overvalued based on earnings compared to the India market.
• BPCL underperformed the Oil and Gas industry which returned -4% over the past year.