Neutral BPCL; target of Rs 310: Motilal Oswal

Neutral

Motilal Oswal's research report on BPCL

BPCL’s EBITDA/PAT came in 12%/11% below expectations in 1QFY26, impacted by lower-than-anticipated GRM (USD 4.9/bbl). However, blended marketing margin stood 25% above estimate at INR8.3/litre (up 75% YoY). Refining throughput and marketing volumes came in line with estimates. The Union Cabinet has approved INR300b in LPG compensation to OMCs, which will be paid in 12 tranches. While the disbursement timeline remains undisclosed, we estimate BPCL to receive ~INR37.5b in both FY26/FY27 (25% of total compensation). This will result in a ~5% increase in BPCL’s FY27E BVPS.

Outlook

While valuation appears reasonable and strong marketing performance continues, a muted medium-term refining outlook (our FY26/FY27 PAT estimates are 17%/18% sensitive to every USD1/bbl change in GRM) and the commencement of a new capex cycle emerge as key concerns. Hence, we reiterate our Neutral rating with an SoTP-based valuation of INR310/share.

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