Accumulate BPCL; target of Rs 441: PLilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher is bullish on Bharat Petroleum Corporation (BPCL) and has recommended accumulate rating on the stock with a target of Rs 441 in its February 14, 2013 research report.
 
“BPCL’s EBITDA and PAT during the quarter stood at Rs22.8bn and Rs16.4bn, down 38.1 percent YoY and 47.5 percent YoY, respectively, with higher government support in Q3FY12. However, given the variability of government support, comparison of quarterly numbers has limited sense. Interest expenditure increased 11.3 percent QoQ on account of higher working capital borrowings, while other income was down 7.1 percent QoQ. We expect government to provide higher support during Q4FY13 to keep company profitable (9MFY13 loss of Rs21.5bn).”
 
“Amongst the key operational inputs, GRMs were weak on a sequential basis during the quarter at US$4.8/bbls compared to US$6.4/bbl in Q2FY13. With octroi being treated as a recoverable item, GRMs have improved by ~US$1.7-US$2/bbl. Refinery throughput during the quarter declined from 5.93MMT in Q2FY13 to 5.55MMT in Q3FY13. Market sales (incl. Exports) during the quarter at 9.3MMT increased by 3.1 percent YoY. BPCL reported an inventory gain of Rs3.34bn during the quarter on the marketing front, compared to a gain of Rs3.01bn during Q2FY13. BPCL currently carries Oil bonds to the tune of Rs57bn on its books. On the bulk diesel front, BPCL has a market share of 13-14 percent. Bina refinery continues to ramp-up with utilisation of 90 percent during 9MFY13 (4.12MMT). Bina reported GRMs of ~US$5/bbls and US$7/bbls in 9MFY13 and Q3FY13, respectively.”
 
“Recent government action of a phased hike in diesel prices and focus on implementing aadhaar for cash subsidies bodes well for the sector. Successful implementation of aadhaar will help improve balance sheet, cash flows and P&L, paving way for re-rating of the company. BPCL presents one of the safest options among OMCs to participate in the theme with upstream levers. Potential positive catalyst to stock price is listing of Bina refinery, inputs from FEED and appraisal activity from Mozambique, coupled with positive news flows from Brazil. We continue to see a valuation re-rating if price reforms were to sustain, coupled with depressed crude oil prices. We maintain ‘Accumulate’, with target price of Rs441/share,” says Prabhudas Lilladher research report.

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