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A PROJECT REPORT ON

INVESTMENT OPPORTUNITY IN PETROLEUM INDUSTRY

FOCUS ON SECURITY ANALYSIS

OF BHARAT PETROLEUM CORP. LTD

SUBMITTED BY SUBMITTED TO

RAJENDRA SINGH DR. SRIDEVI

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Abstract

Crude Oil & Natural Gas are the core pillars that support the development of economy worldwide.

There is hardly any nation that does not seek these indispensable natural resources. Thecountry, which possesses oil & gas, wants more & more. Nations struggle hard to explore for itand are ready to pay any Cost to import it. Today Crude Oil and Natural gas has found itsimportance in almost every field and without them almost nothing in the modern worldwill move. Name any industry and you will find the application of these resources.

Oil is a fossil fuel that can be found as deposits beneath the earths surface. These fuelswere formed when organic matter (such as the remains of a plant or animal) died inancient seas a round 10 million to 600 million years ago. The task of finding oil is assigned togeologists. As demand for oil and natural gas increased, so did the necessity for more accuratemethods of locating deposits. The liquid that comes out of the ground is unprocessed crude oil,

which is generally called petroleum. It varies in color, from clear to tar-black, and in viscosity.The composition of crude oil differs from one oil field to another. Unlike other fossil fuels raw oilor unprocessed ("crude") oil is not very useful in the form it comes out of the ground. The oilneeds to be separated into parts and refined before use in fuels and lubricants, and beforesome of the byproducts could be used in petrochemical processes to form materials such asplastics, and foams.

Crude Oil and Natural Gas satisfy around 62% of the global energy requirement and it is expectedthat this share will increase in the coming decades. It is estimated that the entire global crude oilre serve would end up in the next 40.6 years. Saudi Arabia, Iran, US, Russia, Canada are some ofthe major Crude Oil producers. OPEC contains the worlds largest reserves and produces

around 40% of the world production. In the coming future its share will increase to 50%.

India is the sixth largest consumer of primary energy in the world. In 2010 oil andnatural gas together accounted for 40% of total consumption and this figure is expected toincrease to 45% by 2025. As the domestic production of crude is not adequate to meet the demandof this thirsty nation, nearly 70% of crude is imported and this figure may rise to 86% in 2025.This shows the dependence of the country on the imported crude.

India is among one of the top 10 oil consuming countries in the World. With nearly40% contribution of Oil and Gas in the total energy consumption and with inadequate crude production, India is heavily dependant on Crude import. Crude is the single largest item on

Indias import list. And with a projected growth of 10% in GDP over the next decadesdemand is likely to increase at a faster pace . Keeping this in mind Government announced a New Exploration Licensing Policy in 1997 1998 in order to encourage in house productionof Oil and Gas by inviting bidding from the domestic and foreign companies. There has been a gradual transformation in Indian refining sec tor; from a product deficit country toa product surplus country, India has come a long way. Now the refining capacity is suchthat India can import raw crude, refine it, and export the end products to the internationalmarket . Indias Crude Oil and Natural Gas pipeline sector has a huge potential and government

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is taking various investor friendly steps so as attract more and more investment in this sector,future of Indian crude & gas pipeline industry seems to be very lucrative.

India is heavily dependent on the imported crude oil. As such the fluctuations of internationalcrude price s can be felt in India. In the wake of rising crude price the government here

ha s adopted various means to insulate the consume r from the price volatility. Form theadministered price mechanism(APM) earlier to Trade Parity Pricing mechanism now, Indiancrude & gas prices ha s saw many ups and down but its impact was borne by theconsumers and companies rather than the government. The total revenue to the center notonly consists of customs duty and excise duty they also constitute of royalties, corporate tax,dividends and others.

Introduction

The history of Crude Oil and Natural Gas has been dominated by the time and place ofdiscoveries with enormous results on the history of the 20th century. Crude Oil, PetroleumProducts and Natural gas have always been the major components in international trade forthousand of years. 1914, World War I can be said to be a remarkable year though not forthe war nations but for the Global Crude Oil and Natural Gas industry. This war made thewhole world realize about the importance of the Crude Oil and Natural Gas and since thenthings have never remained the same. Today these resources have become the major source ofrevenue earners for various producing countries in the form of export. In Russia nearlyhalf the hard earned currencies come from the crude and gas exports, whereas the figure goesup to 80% for Venezuela and 95% for Algeria and Nigeria. Today Crude Oil is found its

importance in almost every field and without them almost nothing in the modern world will move. Name any industry and you will find the application of these resources. Be ittransportation or wheels of industry, agriculture or households, plastic or artificial fibers,chemical fertilizers or pesticides, chemicals or medicine we will find the footsteps of crudeoil almost every where.

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DATA PRESENTATION,ANALYSIS &

INTREPRETATION

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FUNDAMENTAL ANALYSIS ON OIL SECTOR

Objective: -

To study the oil industry and find out the growth opportunities.

To carry out the company analysis of the selected company and to suggest whether it is aviable investment option.

INTRODUCTION

Fundamental analysis is the examination of the underlying forces that affect the well being of theeconomy, industry groups, and companies. As with most analysis, the goal is to derive a

forecast profit from future price movements. At the company level, fundamental analysis mayinvolve examination of financial data, management, business concept and competition. At theindustry level, the re might be an examination of supply and demand forces for the products offered. For the national economy, fundamental analysis might focus on economic data to assessthe pre sent and future growth of the economy. To forecast future stock prices, fundamentalanalysis combines economic, industry, and company analysis to derive a stocks investmentopportunity. Fundamental analysis is a method used to determine the value of a stock byanalyzing the financial data that is 'fundamental' to the company. Fundamental analysisdoes not look at the overall state of the market nor does it include behavioral variable s inits methodology. It focuses exclusively on the company's business in order to determinewhether or not the stock should be bought or sold. To buy a share of stock a investor is

buying a proportional share in a business. As a Consequence, to figure out how much thestock is worth, one should determine how much the business is worth. Investors generally need toassess the company's financials in terms of per-share values in order to calculate how muchthe proportional share of the business is worth. Some knows this as fundamental analysis,and most who use it view it as the only kind of rational stock analysis.

Strengths of Fundamental Analysis

Long-term TrendsFundamental analysis is good for long-term investments based on long-term trends. The ability to

identify and predict long-term economic, demographic, technological or consumer trendscan benefit patient investors who pick the right company in the right industry groups.

Value Spotting

Sound fundamental analysis will help identify companies that represent a good value. Some ofthe most renowned investors think long-term and value. Graham and Dodd, Warren Buffet and

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John Neff a reseen as the champions of value investing. Fundamental analysis can helpuncover companies with valuable assets, a strong balance sheet, stable earnings, and stayingpower.

Business Acumen

One of the most obvious, but less tangible, rewards of fundamental analysis is the development ofa thorough understanding of the business. After such painstaking research and analysis, aninvestor will be familiar with the key revenue and profit drivers behind a company.Earnings and earnings expectations can be potent drivers of equity prices. A good understandingcan help investors avoid companies that a reprone to shortfalls and identify those thatcontinue to deliver. In addition to understanding the business, fundamental analysis allowsinvestors to develop an understanding of the key value drivers and companieswithin an industry. Its industry group heavily influences a stocks price. By studying thesegroups, investors can better position themselves to identify opportunities that are high-risk,low-risk , growth oriented, value driven, non-cyclical, cyclical or income-oriented.

Knowing Who's Who

Stocks move as a group. By understanding a company's business, investors can betterposition themselves to categorize stocks within their relevant industry group. Business can changerapidly and with it the revenue mix of a company. Knowing a company's business and being ableto place it in a group can make a huge difference in relative valuations.

Fundamental analysis by EIC model

ECONOMIC ANALYSIS

GDP

India's GDP crossed the trillion-dollar mark and with this India has joined the elite club

of 12 countries with a trillion dollar economy.

The GDP or Gross Domestic Product is the primary indicator used to gauge the healthof a country's economy. The GDP of a country is defined as the market value of all finalgoods and services produced within a country in a given period of time. It is also considered thesum of value added at every stage of production of all final goods and services producedwithin a country in a given period of time .

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2000-

01 to

07-08

9-Aug 10-Sep

Agriculture, forestry

& fishing

2.9 1.6 -0.2

Industry 7.9 3.9 8.2

Mining & Quarrying 5.2 1.6 8.7

Manufacturing 7.7 3.2 8.9

Electricity, Gas & water supply 4.6 3.9 8.2

Construction 10.6 5.9 6.5

Services 8.8 9.8 8.7

Trade, Hotels, Transport andCommunication

10.7 7.6 8.3

Financing, Insurance, Real

Estate & Business Services

8.8 10.1 9.9

Community, Social & PersonalServices

5.6 13.9 8.2

GDP at factor cost 7.3 6.7 7.2

QUARTER WISE

DISTRIBUTION OF GDP:

Year Mar Jun Sep Dec Average

2010 8.6 8.62009 5.8 6 8.6 6.5 6.73

2008 8.5 7.8 7.5 6.1 7.48

According to the data, India's GDP growing at an impressive 8.6 per cent. Agriculture has thelowest contribution in Indias GDP and the largest contribution is from service sector. The factthat the service sector now accounts for more than half the GDP is a milestone in India'seconomic history and takes it closer to the fundamentals of a developed economy. At thetime of independence agriculture occupied the major share of GDP while the contribution ofservices was relatively very less.

We expect GDP arising in the industrial sector to expand 9.6 per cent in 2010/11, rising to 10.3per cent in 2011/12. The expansion in the services sector is expected to approach 9 per cent in2010/11 and inch up to 9.6 per cent in 2011/12. Over all, the non-farm sector is expected to growby 9.2 per cent in 2010/11 and 9.8 per cent in 2011/12.

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Inflation rate

Inflation is defined as a sustained increase in the general level of prices for goods and services. Itis measured as an annual percentage increase. As inflation rises, the value of currency goes down.

Thus the purchasing power of the currency.

YEAR: JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2008 5.51 5.47 7.87 7.81 7.75 7.69 8.33 9.02 9.77 10.45 10.45 9.7

2009 10.5 9.63 8.03 8.7 8.63 9.29 11.9 11.7 11.64 11.49 13.51 14.97

2010 16.2 14.86 14.9 13.3 13.9 13.73

The current rise in inflation has its roots in supply-side factors. There was shortfall indomestic production vis--vis domestic demand and hardening of international prices, prices of primary commodities, mainly food items. Wheat, pulses, edible oils, fruits andvegetables, and condiments and Spices have been the major contributors to the higher

inflation rate of primary articles. The inflation was also accompanied by buoyant growth ofmoney and credit.

On looking at the trend of inflation so far, it can be said that average inflation was higher inJanuary 2010 and its getting down after that but still it is very high than the normal rate and it ismatter of concern for the growing economy.

The government has made an attempt to address the issues of inflation by empowering theneglected agriculture sector. Several other measures in the direction of taming inflation havebeen ta ken using the monetary instruments.

Exchange Rate

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2010 46 46.4 45 44.5 45.8 46.6 46.8 46.2

2009 48.9 49.3 51 50.1 48.5 47.8 48.5 48.3 48.5 46.7 46.6 46.6

2008 39.4 39.8 40 40 42.1 42.9 42.8 43 45.5 48.7 49 48.7

According to the data we caninterpret that in 2010 rupee value against dollar fluctuated very

low inApril 2010 rupee value appreciatedandit wasstrongeragainst dollar.

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Interest Rate

YEAR: JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2008 6 6 6 6 6 6 6 6 6 6 6 5.24

2009 4.05 4 3.55 3.39 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25

2010 3.25 3.25 3.34 3.61 3.75 3.75 4.08

According to the data, we observe that interest rate in 2010 isgrowing it was 3.25 in January

2010 andnow it is 4.08 in July 2010. Ifinterest rate islow thanorganizationborrow more and

can invest to increase productionorprovide facilities to theircustomer which can helpful for

economy togrow ina fast phase.

INDUSTRY ANALYSIS

Top five Player in the Industry are:

1. Indian Oil Corporation Ltd.2. Reliance Industries Ltd.3. Bharat Petroleum Corporation Ltd.4. Hindustan Petroleum Corporation Ltd.5. Oil and Natural gas Corporation Ltd.

Industry Structure

Indian oil and gas sector can be divided into three segments namely -

1. Upstream oil companies2. Midstream oil companies3. Downstream oil companies

UpstreamThe upstream oil companies are involved in the process of exploration and production (E&P) ofcrude and natural gas. These companies are high capital intensive. They are involved in siteidentifying; soil testing, drilling, exploring, pumping and transferring oil to the refineries. In

India, ONGC is the largest public sector upstream company.

MidstreamThe midstream oil companies are those, which procure, crude from the upstreamcompanies and then refine and process it into the end products which can be used by the endconsumers.

DownstreamThese are the companies, which collect the end products from the midstream companies at the

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refinery gate and market them to the end consumer. IOC is the major marketing company in Indiaand it also feature in Fortune 500.

Companies which comes under these segments are-

Total production and consumption

According to Oil & Gas Journal (OGJ), India had approximately 5.6 billion barrels of proven oilreserves as of January 2010, the second-largest amount in the Asia-Pacific regionafter China. Indias crude oil reserves tend to be light and sweet, with specific gravity varyingfrom 38 API in the offshore Mumbai High field to 32 API at other onshore basins.

India produced roughly 880 thousand barrels per day (bbl/d) of total oil in 2009 from over 3,600operating oil wells. Approximately 680 thousand bbl/d was crude oil, the remainder was otherliquids and refinery gain. In 2009, India consumed nearly 3 million bbl/d, making it the fourthlargest consumer of oil in the world. EIA expects approximately 100 thousand bbl/d annual

consumption growth through 2011.

Indianoiland Natural Gas Industr Structure

Upstream oil

Companies

Midstream Oil

Companies

Downstream

oil Companies

Public Sector e.g.

ONGC, OIL etc

Private sector e.g.

Crain, RIL etc

Publicsector e.g.

IOC, HPCL, BPCL etc

Private sector e.g.

Reliance, Essar etc

IBP, GAIL

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GOVERNMENT POLICIES FOR FDI

Exploration & Production

Up to 100% FDI through automatic route Through incorporated/ unincorporated Joint Ventures or directly

Refining

Up to 100% FDI if set up as a private Indian company

Up to 26% in case of state owned companies

Marketing

Up to 100% FDI through automatic route

Product pipelines

Up to 100% FDI through automatic route

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SWOT Analysis of Petroleum Industry

Strength

Demand for petroleum products increase with economics growth. Expectation of Healthyeconomy growth could bolster consumption of petroleum products and hence sales of oilcompanies

India has the potential of becoming a petroleum product hub, with many countries looking tosource refined products from relatively low-cost countries.

Weakness

High dependence on imported crude oil accounting for over 80% of the consumption- could pose

an energy threat to the country anytime in the future. In this sense, such high dependence couldamount to a strategic disadvantage.

The sector is partially government-administrative that is, in LPG (Domestic) and Kerosene (underPDS) denting profitability of upstream and downstream companies.

Lack of crude storage makes the country and by, extension, the oil companies vulnerable to oilshocks.

Opportunity

The recent petrol price deregulation augurs well, especially for private players.

Backward and forward integration in the petroleum value chain portends a bright future.

Natural gas has the potential to be the fuel

Threat

Deregulation of prices will boost competition for existing refining and marketing majors with apossibility of shrinkage in their market shares and consequently, margins.

Continuous of Government interference can make a hamper profits.

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PORTER FIVE FORCESMODEL

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Now we will analyze the financial performance of some companies in the industry.

Large Cap:- IOCL

2006 2007 2008 2009 2010p/e ratio 6.94 3.11 3.82 7.83 5.93

Eps 42.08 64.21 58.39 24.74 64.15

net sales 174,895.12 216,498.85 247,359.24 307,123.99 269136

net profit 4,915.12 7,499.47 6,962.58 2,949.55 10220.5

BPCL

P/e ratio 43.83 6.05 9.41 18.51 9.59

Eps 9.72 49.94 43.72 20.35 69.94

net sales 75,533.30 96,556.85 110,208.13 134,073.43 122359.9

net profit 291.65 1,805.48 1,580.56 735.9 1537..2

HPCL

p/e ratio 26.98 5.32 7.64 15.89 20.12

Eps 11.95 46.3 33.44 16.94 24.12

net sales 71,430.62 89,725.03 104,312.99 124,934.83 108497.7

net profit 405.63 1,571.17 1,134.88 574.98 1301.37

ONGC

p/e ratio 8.63 12.01 12.57 10.34 17.54

Eps 101.2 73.14 78.09 75.4 72.84

net sales 48,200.87 56,903.70 60,137.26 64,367.23 61982.52

net profit 14,523.29 15,642.64 16,314.54 16,126.31 16767.55

GAIL

p/e ratio 11.05 9.21 6.25 7.77 20.14

Eps 27.32 28.22 30.76 22.1 22.53

net sales 16,354.59 16,036.56 18,012.74 23,784.71 25103.55

net profit 2,310.07 2,386.67 2,601.46 2,803.70 3139.84

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MID CAP:- Aban offshore

2006 2007 2008 2009 2010p/e ratio 55.56 88.87 87.57 6.5 15.64

Eps 20.16 23.29 35.2 61.51 53.18net sales 491.17 495.77 657.92 1,055.01 1182.01

net profit 83.82 99.6 159.1 259.76 280.44

Guj Gas

p/e ratio 1.77 6.96 4.74 17.29 24.43

Eps 68.79 24.64 24.6 13.56 13.61

net sales 825.93 1209.44 1296.47 1417.64 1604.3

net profit 88.92 159.09 158.81 175.12 210.4

Hind Oil Explorer

p/e ratio 14.54 56.41 211.1 43.76 57.89

Eps 2.98 0.32 1.85 4.1 3.83

net sales 94.24 114.52 83.35 85.18 140.06

net profit 17.49 2.47 24.1 53.57 41.59

Dolphine offshore enterprises ltd.

p/e ratio 7.55 8.3 7.45 2.44 8.03

Eps 16.52 16.55 17 41.83 33.52

net sales 181.3 205.81 227.71 357.76 528.02

net profit 9.25 14.83 16.26 40.01 46.64

Selan exploration Technology

p/e ratio 12.07 10.1 15.61 3.87 10.6

Eps 5.97 7.32 8.95 32.57 32.57

net sales 18.7 26.15 34.46 99.89 70.8

net profit 8.61 10.57 13.1 46.64 28.8

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Interpretation

Here we can observed that p/e ratio of IOCL and BPCL is low compare to their competitors it

indicates that companies share are undervalued and if we observe p/e ratio of HPCL, ONGC and

Gail ltd. their p/e ratio is high which indicates that their securities are overvalued.

In the case of EPS we can observe that ONGC earning per share is higher compare their

competitors which indicate that company is in good position. The highest net profit earned by

IOCL among its competitors during the period of 2006-2010.

Returns on companies

BPCL: -BY observing the return of BPCL for the period of 2007-2010 we can interpret that ithas mix of return during the given time company sometime faced negative return and some time

positive, we can say that returns are volatile.

IOCL: - In IOCL returns are also volatile for the period of 2007-2010. IOCL securities are more

volatile than BPCL securities. It doesn't have constant return during the given period.

INDEX:- Index returns are not constant in any period of time because of the volatility in returnof the companies listed in the index. Listed companies has positive and negative return during

given period of time.

Correlation and Beta

correlation(BPCL, Nifty) -0.024284087

correlation(BPCL, IOCL) 0.227479777

correlation(Nifty, IOCL) -0.55523408

Interpretation: - If We Observe the Correlation Of two Company Stocks BPCL And IOCL they are

positivelycorrelated which indicates these are movingin the similardirection. In the same mannerif we

observe stock and index those are negatively correlated which indicates index values are moving in

opposite direction with stock values.

Beta for the companies BPCL and Niftyindex willbe: - -0.00451

Beta for the companies IOC and For Nifty Index willbe: - -1.29732

Beta for the companies IOC and for BPCL Index willbe: - 0.134759

Interpretation:- Here if we observe the beta valuesof twocompanies, it ispositive which indicates

that theyare more volatile thanindex values. In the similar mannerif we observe stockandindex values

it isnegative forboth the companiesandindex which indicates theyare less volatile thanindex values.

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COMPANY Analysis

Qualitative Analysis:-

1. The BPCL is one of the established players in the petroleum industry in India.

2. The Company has a technically qualified management team led by promoters having rich

experience in Petroleum Industry.

3. BPCL has raises INR 10 Billion Via Bond in 2010.

4. BPCL planning to expansion at its KOCHI refinery.

5. The company has successfully implemented expansion projects in the past.

6. Various Tax incentives and Subsidies available from the Government of India

7. Bharat Petroleum Corporation Limited Starts Crude Unit At Bina Refinery.8. BPCL recommends Dividend.

9. Oman Oil Picks up 26% stake in BPCL refinery Project business standard10.BPCL announces appointment of Statutory Auditors11.BPCL aims to sell at least INR9 billion oil bonds

Quantitative Analysis:-

1. Bharat Petroleum Corporation ltd. Net worth was 12128.11 in 2009 and 13086.76 crore

in 2010.

2. BPCL total assets were 33299.52 in 2009 and 35281.91 crore as on 31 march 2010.

3. BPCL operation income stood at 4540.63 in 2009 and 2434.51 at 2010.

4. BPCL net profit after tax stood at 735.90 in 2009 and 1537.62 as on march 2010.

5. BPCL Return on capital employed stood at 14.88 in 2009 and 9.72 as on March 2010.

6. BPCL earning per share was 20.35 in 2009 and 42.53 as on March 2010.

By doing the quantitative analysis we can interpret that Company is in good financial position.

Its net profit increased by 108.94% in 2010 from last year which indicates sound business

practices of the organization and sound future cash flow of the company. Earning per share also

increased from 20.35 to 42.53 which is a good sign for exiting investor and a positive indicator

for new investor in the company. And by observing the qualitative parameter of BPCL we can

analyze that company has a good market reputation and its has an expansion potential in future.

Company management also has technical expertise and potential to develop company operation

in near future.

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Porter five forces

1. Threat of intense segment rivalry

This BPCL has got many strong competitors such as Hindustan petroleum, Indian oil etc. So it

faces stiff competition from them but regardless of this it is in the growth stage.

2. Threat of new entrants

This refinery industry requires a huge investment and therefore not many entrants jump into thismarket. After reliance there is not too much companies are looking forward to jump in this sectorso company has an average in it.

3. Threat of substitute products

There is a many substitute product available in market. Like HP, Indian oil etc. So the companyhas to take many careful steps to manufacturing the product.

4. Threat of buyers growing bargaining Power

The price of petroleum products is generally decided by government due to the expenditure and

subsidies provided by government. So consumer will only attract towards the special products

such as speed, power etc. so company has to do innovations to have a brand loyalty but no

bargaining problem will be there.

5. Threat of suppliers growing bargaining power

Role of supplier is very crucial. We can take the example when crude oil prices were 124$ per

Barrel. In India the price was about to make Rs100/liter but due to government subsidies it was

Available at Rs55/liter. So bargaining power is very impotent in this sector.

SWOT Analysis ofBharat Petroleum Corp. Ratio.

Strength

BPCL is the major player in the industry. It is a public sector undertaking organization, it has a government backing. Huge network of outlet in the country.

Weakness Government control over prices. Dependency on oil exploration companies right now

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Highly dependent on Indian market.

OpportunityThe booming Indian economy, huge domestic demand.Venturing upstream (oil exploration) aviation fuel.Can get into consultancy for OIL and Gas sector.

ThreatPrice deregulation-Completion from several playersOil supply shortageAlternative Fuel

Ratio:-

key financialratioof BPCL

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Investment Valuation Ratios

Face Value 10 10 10 10 10

Dividend PerShare 2.5 16 4 7 14

Operating Profit PerShare (Rs) 36.71 102.83 87.15 125.59 67.34

Net Operating Profit PerShare (Rs) 2,517.78 2,670.69 3,048.28 3,708.38 3,325.12

Free Reserves PerShare (Rs) 277.22 273.74 312.56 316.74 --

Bonus in Equity Capital 92.33 76.61 76.61 76.61 76.61

Profitability Ratios

Operating Profit Margin(%) 1.45 3.85 2.85 3.38 2.02

Profit Before Interest And Tax Margin(%) 0.43 2.89 1.84 2.55 0.97

Gross Profit Margin(%) 1.73 4.11 1.86 2.58 0.99

Cash Profit Margin(%) 1.39 2.78 2.2 2.65 2.31

Adjusted Cash Margin(%) 1.57 3.13 2.2 2.65 2.31

Net Profit Margin(%) 0.38 1.85 1.42 0.54 1.25

Adjusted Net Profit Margin(%) 0.56 2.2 1.42 0.54 1.25

Return On Capital Employed(%) 4.53 16.97 11.37 14.88 9.72

Return On Net Worth(%) 3.19 17.57 13.53 6.06 11.74

Adjusted Returnon Net Worth(%) 4.74 20.92 11.58 20.85 12.2

Returnon Assets Excluding Revaluations 1.02 284.16 322.97 335.45 361.97

Returnon Assets Including Revaluations 1.02 284.16 322.97 335.45 361.97

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Returnon Long Term Funds(%) 7.4 28.81 19.46 31.19 9.72

Liquidity And Solvency Ratios

Current Ratio 0.67 0.61 0.74 0.5 1.38

Quick Ratio 0.39 0.45 0.61 0.67 0.71

Debt Equity Ratio 0.92 1.05 1.29 1.75 1.7

Long Term Debt Equity Ratio 0.18 0.21 0.34 0.31 1.7

Debt Coverage Ratios

Interest Cover 3.21 7.5 4.51 2.29 3.4

Total Debtto Owners Fund 0.92 1.05 1.29 1.75 1.7

Financial Charges Coverage Ratio 6.32 9.4 6.15 2.78 4.62

Financial Charges Coverage Ratio Post Tax 5.28 6.68 4.98 1.84 3.75

Management Efficiency Ratios

Inventory TurnoverRatio 8.4 11.24 11.64 21.91 10.93

Debtors TurnoverRatio 69.6 68.13 70.48 88.37 58.81Investments TurnoverRatio 9.58 12.58 11.64 21.91 10.93

Fixed Assets TurnoverRatio 7.8 8.47 5.15 5.98 4.73

Total Assets TurnoverRatio 4.32 4.59 4.14 4.04 3.41

Asset TurnoverRatio 4.36 4.98 5.15 5.98 4.73

Average Raw Material Holding 22.38 12.43 27.65 10.14 --

AverageFinished Goods Held 31.28 25.74 20.66 12.79 --

NumberofDays In Working Capital 12.15 7.02 15.05 6.93 20.64

Profit & Loss Account Ratios

Material Cost Composition 94.6 91.9 92.31 90.98 94.73

Imported CompositionofRaw Materials Consumed 71.52 72.14 70.99 -- --

Selling Distribution Cost Composition 2.16 1.94 1.86 1.8 --

Expenses as CompositionofTotal Sales 5.67 5.78 6.75 4.89 8.56

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 35.33 37.12 9.72 38.66 37.65

Dividend Payout Ratio Cash Profit 9.72 24.73 5.74 15.7 20.82

Earning Retention Ratio 76.08 68.82 88.64 88.75 63.77

Cash Earning Retention Ratio 91.41 78.05 93.73 92.11 79.62

AdjustedCash Flow Times 6.99 3.55 6.13 5.87 7.82

Earnings Per Share 9.72 49.94 43.72 20.35 42.53

Book Value 302.6 284.16 322.97 335.45 361.97

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Interpretation of ratio

Dividend per Share= (sum of dividend over a period of time - special one time dividend)/ no of

outstanding share

Year 2006 2007 2008 2009 2010

Dividend per Share 2.5 16 4 7 14

Interpretation:--

Dividend per share ratio shows the dividend amount paid by the company on the equity. Here we

can see that BPCL has not paid fix dividend to their share holder highest dividend paid on 2007

and lowest was on 2006. In 2010 dividend per share is 14.

Operating Profit Per Share= Operating income/no of outstanding share

Year 2006 2007 2008 2009 2010

Operating Profit Per Share 36.71 102.83 87.15 125.59 67.34

Interpretation:--

Here we can find that the operating profit per share is volatile highest was on 2009 and lowest

was on 2006 and in 2010 operating profit per share is 67.34 it decreased compare to 2009..

Net Profit Margin(%) = (Net Earning /Net Sales)

Year 2006 2007 2008 2009 2010

Net Profit Margin .38 1.85 1.42 0.54 1.25

Interpretation:--

y It will give the information about the how the company is performing over a period of

time.

y The Net profit margin is highest in 2007 after that the company is not able to bit that

record till now.

y From this chart we found that the company is done well in 2008 after that the net profit

margin decreased in 2009 and in 2010 net profit margin is 1.25.

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Return On Net Worth(%) = (Net Profit(After Tax)/Shareholders Fund)*100

Year 2006 2007 2008 2009 2010

Return on Net Worth4.74 20.92 11.85 20.85 12.2

Interpretation:--

y Return on net worth of BPCL is basically the relation between the net profit and

shareholders fund.

y The return on Net worth of BPCL was higher in 2007 and it was lowest in 2006. In 2010

company return on net worth stood at 12.2.

Dividend Payout Ratio Net Profit= Dividend/ Net Income

Year 2006 2007 2008 2009 2010

Dividend Payout Ratio Net Profit 35.33 37.12 9.72 38.66 37.65

Interpretation :--

y Here we see that the company paid highest dividend in 2009 on their net income and it

was lowest in 2008. In march 2010 dividend payout on net profit was 37.65

EPS(earning per share):- net profit available for investor/no. of outstanding share

Year 2006 2007 2008 2009 2010

Dividend Payout Ratio Net Profit 9.72 49.94 43.72 20.35 42.53

Interpretation:-

y This ratio determines what the company is earning for every share.

y In the period of 2006-2010 BPCL EPS is in growth, the actual growth in EPS is bettermeasure for the investor to shortlist the companies

y BPCL with its positive growth of EPS would be good investment avenue for the investor.

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Technical Analysis

Trend Analysis

The concept of trend is absolutely essential to the technical approach to market analysis.

Moving average and trend lines or other tools has a sole purpose of helping to measure the trend

of the market for the purpose of participating in that trend.

Upward trend line:- upward trend line shows that company securities are moving in the positive

direction in the market and the securities has a good potential to grow in the future. In our

analysis of BPCL we can see that company has a upward trend from September 2009 it

decreased in between on march and may of 2010 and again it move to upward.

Downward trend line:- Downward trend line shows that company securities are moving in the

negative direction in the market and securities has less potential to grow in the future. In BPCL

we can observe that company has downward trend in the period of January 2008 to July 2008.

Company share price was declining and it was giving bad return to the shareholders.

Sideway trend:- sideway trend shows that company securities is not so much volatile it move

upward or downward and again it comes in its prior position. BPCL has sideway trend between

the periods ofJanuary to May in 2009.

Moving Average Analysis:-

The directionof movingaverage conveysimportant informationabout prices. A movingaverage shows

those pricesare generallyincreasing. A falling movingaverage indicates that price onaverage are falling.

Arisinglong term movingaverage reflectsalong term uptrend. A fallinglong term movingaverage

reflectsalong term downtrend.

Whenever movingaverage line intersects with the price line of the securities, we canobserve that there

willbe changesinprice of the securities.

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BPCL Trend and moving average analysis has given below:-

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0

100

200

300

400

500

600

700

800

900

Closeing Price

intermediate

decline trend

increasing trend

sideway

trend

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Resistance and Support

Resistance and Support level Of BPCL

Resistance and Support analysis of any company securities shows company lowest and highest

price level in which company securities are getting buy or sale by the investors.

Support level: - The troughs or reaction lows are called support. Support is a level or area on the

chart under the market where buying interest is sufficiently strong to overcome selling pressure.

As a result, a decline is halted and prices turn back again. Usually a support level is identified

beforehand by a previous reaction low.

Resistance level:- Resistance is the opposite of support and represents a price level or area over

the market where selling pressure overcomes buying pressure and a price advance is turned back.

Usually a resistance is determined by a previous peak.

Resistance and support 1

0

100

200

300

400

500

600

700

800

900

resistance1

support1

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Resistance and support 2

0

100

200

300

400

500

600

700

800

900

1000

3-Nov-09 3-Dec-09 3-Jan-10 3-Feb-10 3-Mar-10 3-Apr-10 3-May-10 3-Jun-10 3-Jul-10 3-Aug-10 3

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Resistance and Support 3

0

100

200

300

400

500

600

700

800

900

1000

3-Nov-09 3-Dec-09 3-Jan-10 3-Feb-10 3-Mar-10 3-Apr-10 3-May-10 3-Jun-10 3-Jul-10 3-Aug-10

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Average Moving Analysis

0

100

200

300

400

500

600

700

800

900

3-Sep-07 3-Sep-08 3-Sep-09 3-Sep-10

Close Price

Close Price

50 per. Mov. Avg. (Close Price)

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0

100

200

300

400

500

600

700

800

900

3-Sep-07 3-Sep-08 3-Sep-09 3-Sep-10

Close Price

Close Price

100 per. Mov. Avg. (Close Price)

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0

100

200

300

400

500

600

700

800

900

3-Sep-07 3-Sep-08 3-Sep-09 3-Sep-10

Close Price

Close Price

200 per. Mov. Avg. (Close Price)

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Conclusion & Suggestion

After looking at the above analysis BPCL stands strong Net Profit for last FY & the market capitalizatioof BPCL reflected a good growth in sales and though all the market segments sustained or bettereprevious years. Cost overrun in a few long-term projects impacted the profitability. However, the comp

been oriented towards profitable growth and with the strong fundamentals; the company is well placed tfronts. The financial performance of the company reflected a good growth in sales and though all the bettered their performance over the previous years.

EPS measures per share profit available for distribution for equity shareholders. The ratio shareholder on their investment .The EPS of BPCL has increased in 2010 due to increased in PAmaximizing the wealth of the shareholders. And further BPCL has issued bonus share.

The overall performance of the company is good and there is a continuous flow of projectBusiness. The company is continuing its drive for volume with continued focus on profitabmentioned ratios, BPCL looks profitable in the long run because there is no sign of downfall in th

The governments drive to get higher dividends from PSUs also makes these companies worth

front.

Comparing the financial statement & analyzing the ratios of BPCL it seems to be a good buy for

Threat

External environment

Opportunities

Confront Avoid

Exploit search

BPCL securities comes under Exploit category for

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The investors because of its growth potential in the future. Investor has a opportunities for getting gooBPCL securities.

But investors need to be cautious on the following risk factors

Quantitative and Qualitative Market Risk Factors for Investors

Commodity Price Risk

The prices of oil, in particular, crude oil and value-added products are linked to the international pricrevenues are exposed to the risk of fluctuation in prices in the international markets.

Operating Risk

The company is exposed to operating risks, including reservoir risk, risk of loss of oil and gas and naturall the installations and facilities. But however the company has insured the installations and facilreplacement costs will be borne by the insurance company. However, the company is not covered for los

Exchange Rate Risk

BPCL has substantial purchases of services and equipment in foreign currencies and the prices of crudeare linked to the international prices of crude oil and value-added products, which are traditionally deno

the company is exposed to risks relating to exchange rate fluctuations. There is no hedging or derivativeHowever, the risk involved in the required payments in foreign currencies is offset to some degree by theoil and value-added products, which are linked to the U.S. Dollar currency exchange rates and increase against the Indian Rupee.

Interest Rate Risk

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The interest rate risk results from changes in interest rates on foreign currency loans, which may affecBPCL is exposed to interest rate risk on its earnings. As BPCL makes short term investments wiinstitutions and a decrease in the interest rates in the domestic market will result in lower interest earning

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Bibliography

www.geojit.com www.maketlive.in

www.icicidirect.com www.conceptconsultant.com

www.moneycontrol.com

www.nseindia.com

www.bseindia.com

www.ibef.org

www.managementparadise.com

www.moneypore.com

www.buzzingstocks.com

www.petroleum.nic.in

www.Bharatpetroleum.com

www.sebi.gov.in

www.tradingeconomics.com

www.stockfortune.com

www.corporateinformation.com

www.xe.com

www.passionatetrader.com

www.stocklinedirect.com

in.reuter.com

www.theequitydesk.com

www.desitrademall.com

www.tradejii.com

www.indiastudychannel.com