Prabhudas Lilladher's research report on Bharat Petroleum Corporation
We change our FY24/25E earnings by 2.7%/-3% to factor in actual FY23. Bharat Petroleum Corporation (BPCL) reported better than expected Q4 results with EBITDA of Rs111.5bn (+163% Q/Q; PLe: Rs 69.4bn) and PAT of Rs78.4bn (+300% Q/Q; PLe: Rs49.2bn) led by better than expected refining profitability (Q4 GRMs USD20.6 /bbl). FY23 EBIDTA/PAT at Rs109.5bn (- 42%YoY) and Rs35.4bn (-64%YoY) was hit by sharp losses on marketing business. However, improving marketing environment will drive near term earnings as Q1FY24E; blended marketing margins are at ~Rs7/ltr post drop in international diesel prices to ~$90 (recent peak of USD170/bbl) along with range bound oil prices due to global recessionary pressure and high interest rates, despite increased demand from China.
Outlook
We believe BPCL along with other OMCs, are all well placed to benefit from improving marketing situations and healthy refining profitability. Reiterate ‘BUY’ with a PT of Rs425 based on 6.0 x EV/E FY24E (7x earlier) as business stabilises.
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