Operating Margin - Bharat Petroleum Corporation Ltd (NSE:BPCL)

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Price: 367.8 INR -0.51%

Market Cap: 1.6T INR

5.4%

Current

Average

10.4%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

5.4%

Operating Profit

273.8B

Revenue

5.1T

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
IN		Bharat Petroleum Corporation Ltd NSE:BPCL	1.6T INR	5%
IN		Reliance Industries Ltd NSE:RELIANCE	21.2T INR	12%
US		Phillips 66 NYSE:PSX	52B USD	2%
US		Marathon Petroleum Corp NYSE:MPC	51.4B USD	5%
US		Valero Energy Corp NYSE:VLO	50.3B USD	3%
PL	O	Orlen SA PSE:PKN	621.1B CZK	10%
PL		Polski Koncern Naftowy Orlen SA WSE:PKN	109B PLN	10%
IN		Indian Oil Corporation Ltd NSE:IOC	2.2T INR	4%
JP		ENEOS Holdings Inc TSE:5020	2.9T JPY	0%
FI		Neste Oyj OMXH:NESTE	14.5B EUR	1%
TW		Formosa Petrochemical Corp TWSE:6505	469.6B TWD	1%

Bharat Petroleum Corporation Ltd
Glance View

Economic Moat

None

Market Cap

1.6T INR

Industry

Energy

Bharat Petroleum Corporation Ltd. (BPCL), one of India's leading oil and gas companies, traces its roots back to 1952, when it was incorporated as Burmah-Shell Oil Storage and Distributing Company of India Limited. Over the decades, it has evolved from a straightforward oil business to a dynamic energy powerhouse. The company is involved in every segment of the oil and gas supply chain, from refining crude oil into market-ready products at its major refineries to ensuring these products reach consumers through an extensive network of fuel retail outlets and distribution channels. The refining process, an intricate operation where crude oil is transformed into various fuels such as petrol, diesel, kerosene, and liquefied petroleum gas, serves as the lifeblood of BPCL’s operations, generating substantial revenue streams that fund its expansive enterprise. BPCL's profitability hinges on its adeptness at managing the complexities of the oil market, leveraging its robust infrastructure and logistics network to optimize the supply and distribution of fuel products across India. Beyond conventional fuels, the company has also embraced diversification into sustainable energy solutions, investing in renewable energy projects and innovation. This holistic approach not only buffers it against the volatility of global oil prices but also aligns with the global pivot towards sustainable energy practices. BPCL's business model is a careful balance between maximizing efficiencies in traditional oil and gas operations while strategically positioning itself in the evolving energy landscape. Its revenue generation thrives on the seamless integration of refining capabilities with an expansive marketing and distribution apparatus, ensuring it remains a cornerstone of India's energy sector.

View BPCL Analysis

BPCL Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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Bharat Petroleum Corporation Ltd
NSE:BPCL