Buy BPCL; target of Rs 835: A C Choksi

A C Choksi is bullish on Bharat Petroleum Corporation (BPCL) and has recommended buy rating on the stock with a target of Rs 835 in its May 16, 2012 research report.

“Bharat Petroleum Corporation Limited (BPCL), a fortune 500 oil refining, exploration and marketing PSU with Navratna status. On 24th January 1976, the Burmah Shell Group of Companies was taken over by the Government of India to form Bharat Refineries Limited. On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. Post Nationalisation, BPCL changed gears and embarked upon a rapid growth path. Massive expansion and modernizations provided a tremendous boost to the company's performance.”

“BPCL holds 10% stake in Rovuma basin gas asset in Mozambique which has discovered 59 meters of natural gas in Rovuma concession Area 1. As per the operator of the gas field Mr. Anadarko Mozambique, there is estimated potential to add up to 7 to 20 trillion cubic feet (tcf) to the already discovered 17 to 30 tcf of recoverable natural gas reserves in the area. It will make total reserves of 50 tcf which can produce 180 million metric standard cubic meter of gas per day and can support LNG with capacity of 50 million tonnes annually. The major advantage for BPCL is that it increases its strength to raise money from market for further capex. According to the estimates these reserves is way above the Reliance Industries' 6.11 tcf.”

“As per Mr. Pranab Mukherjee, Finance Minister, it is impossible for the government to maintain the current level of fuel subsidies and government will address under-recoveries of oil marketing company which is 1.8 lakh crore for the financial year. Prices of diesel, LPG and kerosene are expected to increase after Budget session of Parliament which is scheduled to end on 22 May,2012. Petrol price is also likely to increase. Hence, this will result into reduction in under-recoveries forBPCL growth. Thus we are bullish on BPCL as we feel that it provides a good investment opportunity for short-term investment horizon. Therefore, we recommend BUY rating onBPCLwith a price target of Rs. 835,” says A C Choksi research report. 

Bodies Corporate holding more than 50% in Indian cos

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