Buy BPCL; target of Rs 777: SPA Research

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26 Aug, 2025 12:21

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SPA Research is bullish on Bharat Petroleum Corporation (BPCL) and has recommended buy rating on the stock with a target of Rs 777 in its May 29, 2012 research report.

“BPCL's revenue increased by 10% QoQ and 43% YoY to INR 646 bn. The company's net profit increased significantly by 4x YoY and 26% QoQ to INR 39 bn. The robust performance is mainly attributed to higher sales volume (2% QoQ, 6% YoY) coupled with higher compensation received from upstream and the Govt., which lead to over recovery of INR 36 bn.”

“BPCL achieved crude throughput of 6 mmt in Q4FY12 which is up by 8% YoY and down by 2% on QoQ basis. The sales volume increased by 2% QoQ and 6% YoY to 8.23 mmt due to higher sales of MS, HSD, ATF and LPG. BPCL's average GRM for Q4FY12 improved to USD 4.2/bbl vs USD 3.5/bbl in Q3FY12 due to inventory gain. GRMs of the Mumbai refinery were at US$3.1/bbl and of the Kochi refinery were at US$3.2/bbl for FY12.The company reported forex gain of INR 8bn during the quarter due to weakness in crude oil prices and volatile exchange rate. BPCL incurred INR 326 bn loss on sale of diesel, kerosene and LPG during FY12 (up by 82% as compared to FY11) of which upstream and the Govt. shared 40% and 60% of total under recoveries. In 9MFY12, BPCL accounted only 38% and 46% of total subsidy received from upstream and Govt respectively. Hence in lieu of the previous quarter's adjustment, BPCL reported net over recovery of INR 36 bn in Q4FY12.”

“BPCL's future outlook remains positive as the company is planning to expand its refining capacity by 75% to 42 mmt and is also diversifying its portfolio into exploration and petrochemicals in order to reduce its exposure to under recoveries. In FY13, we expect BPCL to receive 50% cash subsidy from the Govt. and 40% from upstream companies by the way of discount on crude oil purchases. The company is currently trading at 16.1x FY13E EPS and 8.1x FY13E EV/EBIDTA. We are revising SOTP based fair value of BPCL to INR 777 (INR 723 earlier) and maintain our HOLD rating given regulatory overhangs,” says SPA Research report. 

Public holding more than 90% in Indian cos

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