C P C L — Q4 FY25 earnings call

Call held 2 May 2025

Management summary

Chennai Petroleum Corporation Limited (CPCL) delivered strong operational performance in Q4 FY25 and FY25, marked by high capacity utilization and record-low energy intensity. The company achieved a significant upgrade to Schedule-A PSE status and expanded its product portfolio with pharma-grade hexane. However, profitability was impacted by a substantial year-on-year decline in Gross Refining Margins (GRM), driven by reduced international product cracks and crude price volatility.

Highlights

  • Upgraded from Schedule-B to Schedule-A Central Public Sector Enterprise by Government of India during August 2024.

  • Achieved a crude throughput of 10.45 MMT (99.5% of installed capacity) for FY25, and 2.974 MMT (113% of installed capacity) for Q4 FY25.

  • Registered the lowest ever Energy Intensity Index of 87.4 for FY25, with fuel and loss at 8.51%.

  • Introduced new pharma-grade hexane and increased RLNG consumption to 527 TMT in FY25.

  • Achieved an S&P Global ESG score of 46, which is above the Indian average.

Concerns

  • GRM for FY25 was $4.22 per barrel, significantly lower than FY24's $8.64 per barrel, primarily due to reduced product cracks.

  • Q4 FY25 GRM was $6.22 per barrel, lower than Q4 FY24's $7.7 per barrel.

  • The uncertainties due to volatility of crude prices pose a challenge.

Key financials

3 periods

Headline

  • Debt-Equity Ratio (Mar 31, 2025)
    0.39
  • Net Worth (Mar 31, 2025)
    ₹7,939 Cr
  • Dividend per Share
    ₹5

Q4 FY25

  • GRM
    6.22 $/bbl

FY25

  • GRM
    4.22 $/bbl
  • Crude Throughput
    10.45 MMT

What they filed

Q1 FY27: revenue up 84.8%, net profit up 1884.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue12,087 12,925 17,249 14,812 16,327 +35%15,683 +21%16,817 −3%27,369 +85%
EBITDA-675 242 785 99 1,144 +269%1,478 +511%2,036 +159%1,555 +1471%
Net profit-629 10 450 -57 732 +216%987 +9770%1,400 +211%1,017 +1884%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹700 Cr
    • Maintenance CAPEX ₹200 Cr
    • Value added projects (e.g., LOBS) ₹400 Cr
    Our maintenance CAPEX remains Rs. 200-250 crore range, and the next year forecast also, we feel the CAPEX will be in that range. The maintenance CAPEX will be at around Rs. 200-250 crore range and depending on value added projects approvals, the actual will be a little different. The normal maintenance CAPEX for the next two years would be around Rs. 250 to Rs. 300 crores... And with this project, another Rs. 400 to Rs. 500 crores you can add for each of the year. So, without this project, about Rs. 300 crores per year. With this project, about Rs. 700 to Rs. 800 crores per year.
  • Debt Gross ₹3,100 Cr
    the debt stands at Rs. 3,100 crores as compared to Rs. 2,762 crores as on March 31, 2024. Net worth is at Rs. 7,939 crores as on March 31, 2025.
  • Dividend ₹5/share (final) Payout ratio 50%
    the Board has also recommended a dividend of Rs. 5 per equity share that is 50% of face value for the current year

Guidance & targets

Operational Status

  • Upgrade to Schedule-A PSE Operational Status · August 2024 · High confidence Achieved
    CPCL has been upgraded from Schedule-B to Schedule-A Central Public Sector Enterprise by Government of India during August 2024

    — Rohit Agrawala, Director (Finance)

  • Navaratna Status Operational Status · Going forward · Medium confidence Obtain
    will strengthen the management and expedite the decision-making process and also enable us to obtain Navaratna status

    — Rohit Agrawala, Director (Finance)

Operational Efficiency

  • Energy Efficiency Operational Efficiency · Going forward · High confidence Develop new schemes
    we are committed to develop new schemes on energy efficiency

    — Rohit Agrawala, Director (Finance)

  • Fuel and Loss Reduction Operational Efficiency · Going forward · High confidence Further lower
    take the fuel and loss reduction roadmap further lower

    — Rohit Agrawala, Director (Finance)

  • Energy Intensity Index Operational Efficiency · Continuous basis · Medium confidence Improve further
    on energy intensity index and fuel efficiency, we would improve on a continuous basis.

    — Rohit Agrawala, Director (Finance)

  • Fuel Efficiency Operational Efficiency · Continuous basis · Medium confidence Improve further

    — Rohit Agrawala, Director (Finance)

Product Portfolio

  • Enhanced Production of Value-Added Products Product Portfolio · Going forward · High confidence Develop
    then develop enhanced production of value-added products as well going forward

    — Rohit Agrawala, Director (Finance)

Capex

  • Maintenance CAPEX Capex · Next year (FY26) · High confidence Rs. 200-250 crore range
    Our maintenance CAPEX remains Rs. 200-250 crore range, and the next year forecast also, we feel the CAPEX will be in that range.

    — Rohit Agrawala, Director (Finance)

  • Total CAPEX (with LOBS project) Capex · Next year (FY26) · High confidence Rs. 700-800 crores per year
    With this project, about Rs. 700 to Rs. 800 crores per year.

    — Rohit Agrawala, Director (Finance)

Project Status

  • LOBS Project Approval Project Status · Quickly · Medium confidence Approval received
    LOBS i.e. Lube Oil Based Stock, Group-II and III, the proposal is at a very advanced stage on approval... Based on approvals we can take up this project quickly.

    — Rohit Agrawala, Director (Finance)

  • Cauvery Refinery Project CCEA Approval Project Status · Few months · Medium confidence Received
    We are awaiting CCEA approval, that process is on, and we expect it in few months.

    — Rohit Agrawala, Director (Finance)

Project Financials

  • Cauvery Refinery Project Capital Cost Project Financials · High confidence Rs. 36,354 crores
    The revised capital cost is at Rs. 36,354 crores with a 25:75 equity holding between CPCL and Indian oil respectively.

    — Rohit Agrawala, Director (Finance)

Operational Performance

  • Throughput Operational Performance · 2025-26 · Medium confidence Higher than last year
    So, you can expect a throughput which is higher than last year on the operational part.

    — Rohit Agrawala, Director (Finance)

What to watch in Q1 FY26

CCEA approval for Cauvery refinery project

within few months
Current Awaited
Target Approval received

Why it matters

This approval is essential for the progress and financial structuring of the major refinery expansion project.

We are awaiting CCEA approval, that process is on, and we expect it in few months.

Risks & concerns

  • Reduced international product cracks

    high

    Product cracks for HSD and other products have come down to 10 or sub-10 level in the current year from $13-15 per barrel, significantly impacting GRM and profits.

    Management acknowledged

  • Volatility of crude prices

    medium

    The uncertainties due to volatility of crude prices do pose a challenge, though management focuses on controllable factors like efficiency.

    Management acknowledged

  • Impact of maintenance shutdowns (M&I) on profitability

    medium

    Large M&I shutdowns reduce product processing availability and involve startup/shutdown costs, affecting profitability. The impact for FY26 is expected to be lower than FY25.

    Management acknowledged

Q&A highlights

8 direct
Inventory gain impact on GRM for Q4 FY25 and full year FY25 Direct
Yes, the inventory gain is not very significant for the quarter. It is only $ 0.66 per barrel. And in absolute rupee terms, it is Rs. 125 crores only. But on an overall annual basis, the inventory would be a loss that is $ 0.06 per barrel, Rs. 40 crores in amount.

Clarifies that inventory gains were not a significant driver of the premium GRM in Q4 and that the full year saw an inventory loss, providing context for profitability.

Asked by Yogesh Patil

Long-term crude sourcing strategy and discounts received Direct
Broadly, what is happening, we use in our long-term a lot of Basrah heavy, Basrah medium grade crude from IRAQ and then Arab grades from Saudi ARAMCO. The premium/discount is based on Official Selling Price (OSP) declared by the supplier monthly. Looking into our configuration we have optimised it on an overall economics angle also and these are the best suitable crudes for us and that is how we have kept them in our long-term basket.

Explains CPCL's crude sourcing philosophy, emphasizing optimization based on overall economics and refinery configuration rather than solely on discounts.

Asked by Yogesh Patil

Updates on Cauvery refinery expansion project, including cost, completion, and product slate Direct
The revised capital cost is at Rs. 36,354 crores with a 25:75 equity holding between CPCL and Indian oil respectively... We are awaiting CCEA approval, that process is on, and we expect it in few months. Some more updates will come in that respect. With respect to product slate, this new refinery had a 6% PP i.e. petrochemical index of 6%.

Provides critical updates on the large-scale Cauvery project, detailing its revised cost, equity structure, land status, regulatory approval timeline, and product focus (polypropylene).

Asked by Yogesh Patil

CAPEX guidance for the next two years, including the LOBS project Direct
The normal maintenance CAPEX for the next two years would be around Rs. 250 to Rs. 300 crores... And with this project, another Rs. 400 to Rs. 500 crores you can add for each of the year. So, without this project, about Rs. 300 crores per year. With this project, about Rs. 700 to Rs. 800 crores per year.

Offers clear financial guidance on future capital expenditure, differentiating between maintenance and growth-oriented projects like LOBS, which is crucial for financial modeling.

Asked by Krishna Mundra

Reasons for the reduction in dividend compared to the previous year Direct
No, dividend has not come down because of maintenance shutdown or any other factor. Dividend has come down because of the profits. When we compare the last year profits and current year profits, there is a significant change. The primary reason is the international cracks. The cracks which were there at about close to $13 to $15 per barrel in HSD and other products has come down to 10 or sub-10 level in the current year.

Directly attributes the dividend reduction to lower profits caused by a significant decline in international product cracks, clarifying it's not due to operational issues or inventory losses.

Asked by Sumit

Share of Russian crude in Q4 FY25 and trending in Q1 FY26, along with discounts Direct
I'll term it as an opportunity crude. And opportunity crude, I think on a full year basis was around 30% not very significantly different from earlier years... On an annual basis, if you ask me, the average would be little less than $2 per barrel. In the last quarter, it would be less than $1 per barrel. But intermittently, there were $3- $4 per barrel also.

Quantifies the company's utilization of 'opportunity crude' and the range of discounts received, which is a key factor in CPCL's ability to achieve premium GRMs.

Asked by Yash Nandwani

Southern market shortfall for MS and CPCL's strategy to leverage it Direct
MS in southern market, there is a clear shortfall so, the production is less than demand. It is close to about 20 TMT per month. So, that is how, if you see in CPCL strategy whatever little flexibility is there, we have continuously tried to increase MS, so that we can take advantage of the demand scenarios and we can increase our margins.

Highlights a specific regional market opportunity for Motor Spirit (MS) and CPCL's proactive strategy to adjust production to capitalize on this demand-supply gap for margin improvement.

Asked by Harshraj Aggarwal

Management's view on the market outlook (domestic and global cracks) for the next two years Direct
As you have yourself said, no capacity is coming immediately. Maybe it will span over 2 years, or little after that, those capacity will come up... So, I feel that it may not have a significant impact on immediate or near immediate or mid-term, medium-term, with respect to margins or GRM.

Provides management's forward-looking perspective on the refining market, suggesting that new capacities will align with demand and are unlikely to significantly impact GRMs in the medium term.

Asked by Harshraj Aggarwal

3 min read 6 chapters

Detailed narrative

Operational Excellence and Efficiency Gains

CPCL demonstrated stellar operational performance in FY25, achieving a crude throughput of 10.45 MMT, representing 99.5% of installed capacity, and 113% in Q4 FY25 (2.974 MMT). The company recorded its lowest ever Energy Intensity Index (EII) of 87.4 and reduced its fuel and loss index to 8.51% for the year, reflecting optimized energy utilization. RLNG consumption also increased to 527 TMT in FY25 from 441 TMT in FY24, contributing to both profitability and environmental sustainability. The company maintained an impressive safety record with 1884 fire-free days as of March 31, 2025.

Financial Performance and Margin Dynamics

While CPCL achieved a premium GRM over the Singapore benchmark ($6.22/bbl vs $3.1/bbl in Q4 FY25), the overall GRM for FY25 stood at $4.22/bbl, a significant reduction from $8.64/bbl in FY24. This decline was primarily attributed to the compression of international product cracks, which fell from $13-15/bbl to sub-$10/bbl for products like HSD. Inventory gains were minimal at $0.66/bbl (Rs. 125 crores) in Q4, with an annual inventory loss of $0.06/bbl (Rs. 40 crores). The company processed approximately 64-65% high sulfur crude, optimizing sourcing based on economics.

Strategic Growth and Product Diversification

CPCL introduced pharma-grade hexane during the year, expanding its value-added product portfolio and market reach. The company also conducted a trial run for Sustainable Aviation Fuel (SAF), positioning itself for an early role in its potential rollout. Management highlighted a focus on increasing MS production to capitalize on the existing shortfall of approximately 20 TMT per month in the southern market, aiming to improve margins. The LOBS (Lube Oil Based Stock) project, aimed at upgrading NAPHTHA and HSD to Group-II and III, is at an advanced approval stage and is expected to be highly profitable.

Cauvery Refinery Expansion Project Update

The proposed Cauvery Basin Refinery project has a revised capital cost of Rs. 36,354 crores, with an equity structure of 25:75 between CPCL and Indian Oil Corporation. Land acquisition for the 1200-acre project is complete, and the company is awaiting CCEA approval, expected within a few months. The new refinery is designed with a 6% petrochemical index, primarily for polypropylene production. The JV will have a separate debt-equity structure, currently planned at 2:1.

Capital Expenditure and Debt Management

CPCL's debt-equity ratio stood at 0.39 as of March 31, 2025, with absolute debt at Rs. 3,100 crores, reflecting a slight increase from 0.32 and Rs. 2,762 crores respectively in the previous year. The company spent Rs. 673 crores on CAPEX in FY25. For FY26, maintenance CAPEX is projected to be in the Rs. 200-250 crore range, with an additional Rs. 400-500 crores annually for value-added projects like the LOBS project, bringing total annual CAPEX to Rs. 700-800 crores. The Board recommended a dividend of Rs. 5 per equity share (50% of face value).

Governance and Sustainability Initiatives

CPCL achieved an upgrade from Schedule-B to Schedule-A Central Public Sector Enterprise, which is expected to strengthen management and expedite decision-making towards achieving Navaratna status. The company successfully implemented and certified its Information Security Management System (ISMS) to ISO 27001:2022, enhancing system security. CPCL also achieved an S&P Global ESG score of 46 for 2024, surpassing the Indian average, demonstrating its commitment to transparency and sustainability.

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