BPCL Q3: Brokerages bullish on long-term growth outlook, await relief in upcoming Budget

BPCL shares have gained 14 percent over the past 12 months.

Brokerages reiterated their bullishness on oil marketing major Bharat Petroleum Corporation Ltd. (BPCL) despite the miss in its earnings show for the quarter ended December (Q3) for the current financial year (FY25).

Bharat Petroleum Corporation Limited reported 20 percent rise in consolidated net profit at Rs 3,806 crore for the quarter ended December 31, 2024 on account of healthy marketing margins. It reported net profit of Rs 3,181 crore in the year-ago period.

BPCL's revenue from operations decreased 2 percent to Rs 1.27 lakh crore in Q3FY25 as against Rs 1.3 lakh crore in the year-ago period. The company’s Q3 results were impacted by weaker refining performance and unexpected inventory losses, but management expects government compensation for these losses in the upcoming budget.

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CLSA upgraded BPCL from 'underperform' to 'hold', setting a target price of Rs 271.2 per share.  BPCL plans to reduce the share of Russian crude in its sourcing mix from 30 percent to 20 percent by March, which is expected to be manageable. Following recent stock correction, CLSA believes BPCL is trading near its target price, prompting the upgrade.

Morgan Stanley maintains an 'overweight' rating on BPCL with a target price of Rs 419 per share, citing strong domestic growth and an oversupply of feedstock. The company expressed confidence in receiving cooking gas subsidies by April 2025 and provided clarity on its long-term growth strategy and short-term challenges.

Japan -based brokerage Nomura maintained its 'buy' call, but lowered its target price on BPCL shares to Rs 360, from Rs 380 earlier, noting a favorable construct for the OMCs, given a muted outlook for crude prices. The crude prices will drive significantly higher marketing margins and a favorable refining construct given demand outpacing supply by 0.5mn b/d.

"We note, the government is likely to provide relief to the OMCs on LPG under-recoveries in the upcoming Budget, which will be a significant positive for the pack," added the brokerage.

Following the results, BPCL shares sank 2.14 percent in trade to settle at Rs 271.65 per share. Over the past 12 months, the shares have run up 14 percent, outpacing the Nifty 50 that's seen a 12 month return of 8.2 percent during the same time period.

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