HDFC Securities is bullish on Bharat Petroleum Corporation has recommended buy rating on the stock with a target price of Rs 434 in its research report dated August 13, 2019.
HDFC Securities' research report on Bharat Petroleum Corporation
BPCL’s 1QFY20 EBITDA came in at Rs 21.8bn (down 43.7/54.6% YoY/QoQ) owing to (1) Planned shutdown of its Mumbai refinery, (2) Fall in refining GRMs and (3) Lower blended gross marketing margins. Adjusting for inventory and forex losses, core EBITDA was Rs 26.01bn (+36.8/-37.7% YoY/QoQ). Refining: Refinery throughput was 7.45mmt (-3.7/-9.3% YoY/QoQ). Utilisation was at 103/112% for the Mumbai/Kochi refineries. Core GRM (excluding inventory losses of USD 0.9/bbl) stood at USD 3.68/bbl (USD 4.2/2.6 in 1Q/4QFY19) which was higher than the benchmark. GRMs were impacted owing to refinery shut down. GRMs are expected to increase from the current levels with gradual increase in the share of sour crude at their Kochi refinery from 80% now to 100%.
Inventory losses and shutdown of BPCL’s refinery has resulted in a muted 1Q performance. However, we maintain our BUY owing to its impeccable refining assets and healthy free cash flows (Rs 66.55bn) over FY21-22E.
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