BPCL and GAIL ink Rs 63,000 crore propane supply deal, boosting shares

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BPCL and GAIL ink Rs 63,000 crore propane supply deal, boosting shares

In a move that has bolstered the share prices of both companies, Bharat Petroleum Corporation Limited (BPCL) and GAIL (India) Ltd have entered into a 15-year propane supply agreement valued at Rs 63,000 crore. Following the announcement of the deal, GAIL India's shares rose by 2.5%, while BPCL's increased by 1.1%.

The agreement will see BPCL supplying GAIL with 600 thousand tonnes per annum (KTPA) of propane from its expanding liquefied petroleum gas (LPG) import facility in Uran. This facility is being developed to accommodate 3 million tonnes per annum (MTPA) of propane and butane imports.

The supplied propane will be utilized to power GAIL's inaugural Propane Dehydrogenation - Polypropylene (PDH-PP) project in Usar, Maharashtra. This marks the beginning of India's first PDH plant, which is scheduled to commence operations in 2025.

The financial results for the July-September period were also released on Thursday, revealing a standalone net profit of Rs 2,404.9 crore for GAIL India and a consolidated net profit of Rs 8,501 crore for BPCL. These profits have been attributed to softer crude oil prices and decreased raw material costs.

This deal represents a significant milestone for India's petrochemical sector, potentially paving the way for further advancements in this industry.

InvestingPro Insights

Drawing from InvestingPro's real-time data and insights, it's worth noting that GAIL, despite having low earnings quality with free cash flow trailing net income, is a prominent player in the Gas Utilities industry. The company has maintained dividend payments for 24 consecutive years and is expected to remain profitable, as it has been over the last twelve months.

On the other hand, BPCL, a significant player in the Oil, Gas & Consumable Fuels industry, is expected to see growth in net income this year. The company's stock generally trades with low price volatility and it has also maintained dividend payments for 24 consecutive years.

InvestingPro's data shows BPCL with a market cap of 9530.13M USD and a P/E ratio of 15 as of Q2 2024. The company's revenue for the same period stands at 16216.71M USD, with a gross profit of 2057.95M USD. Meanwhile, GAIL has a market cap of 9300.91M USD, a P/E ratio of 2.79, and revenue of 54508.13M USD as of Q2 2024.

For more detailed insights and tips, consider exploring the InvestingPro platform, which offers a wealth of information to guide your investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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