State-run Bharat Petroleum Corporation Ltd. is likely to return to profitability in the December quarter after losing nearly Rs 7,000 crore in the first two quarters of the current financial year.

A CNBC-TV18 poll expects the company's revenue to grow in the mid-single-digits compared to the September quarter. Other parameters are also likely to rise, given the low base.

BPCL's losses in the September quarter were also cushioned due to a one-time grant of Rs 5,582 crore for under recoveries on the sale of domestic LPG. It is unclear whether a similar grant would be made this time as well.

CNBC-TV18 had reported earlier this month citing sources that state-run Oil Marketing Companies (OMCs) - HPCL, BPCL and Indian Oil Corporation were seeking compensation of as much as Rs 50,000 crore to cover up for the losses that they have incurred due to the freeze in fuel prices.

As an immediate measure, companies are of the view that diesel prices can be hiked by Rs 2-3 per litre, according to sources, who also said that the OMCs are currently making some loss on diesel and marginal gains on petrol.

Reported refining margin is likely to be at $15 per barrel compared to $16.8 per barrel in the September quarter.

A sharp correction in oil prices coupled with no retail price change for diesel, petrol and LPG will potentially bring down marketing under-recoveries for BPCL during the quarter.

Under-recovery is the notional loss that oil companies incur due to the difference between the subsidised price at which they sell their products compared to what they actually should have received.

Crude throughput is likely to rise 5 percent on a sequential basis to 9.3 million metric tonnes.

In a note after its September quarter earnings, brokerage firm Jefferies had mentioned that it expects marketing losses to continue, as India will head into a busy election calendar.

However, on January 12, Morgan Stanley wrote in a note that rising crude discounts and improved domestic demand should reverse the under-recoveries of the first half of the financial year. The note further said that any government compensation would be an upside surprise and highlighted BPCL and Indian Oil as its top picks.

On the valuation front, BPCL trades at 8x Earnings per Share for financial year 2024, compared to Indian Oil's 7x and HPCL's 5.5x. Shares of BPCL have declined 15 percent over the last 12 months.

(Edited by : Hormaz Fatakia)