Buy BPCL; target of Rs 730: Emkay

Buy

Emkay's research report on BPCL

BPCL clocked Q4FY24 EBITDA/APAT of Rs92.7/55.7bn – a sizable 17-18% beat each, driven by higher-than-expected implied marketing margin of ~Rs7/kg (at a 16% beat). BPCL’s reported GRM of USD12.5/bbl (vs. our estimate of USD13.5/bbl) was better than peers’, with LPG buffer net positive vs. net negative for peers. Mgmt. reiterated its capex plans of Rs1.7trn up till CY28, and FY25/26 capex target is Rs150-160/160-200bn. Mgmt. indicated favorable margins at USD80-85/bbl crude price. We maintain our constructive stance on OMCs led by steady marketing outlook, as the general elections pan out and despite the volatile refining scenario. We raise FY25-26E EPS by 15-20% each, on better marketing margins and below operating-line adjustments.

Outlook

We retain BUY, and raise rolled over Mar-25E TP by 22% to Rs730/share, supported by lower net debt.

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