Buy BPCL; target of Rs 375: Emkay Global Financial

Buy

Emkay Global Financial's research report on BPCL

BPCL posted largely in-line earnings in Q3FY25 with SA EBITDA/APAT up 26%/37% YoY to Rs78.5/46.5bn. Reported GRM stood at USD5.6/bbl vs our estimate of USD7/bbl. Implied marketing margin saw a 4% miss at ~Rs8.9/kg, but was offset by 6% lower opex. LPG losses rose to Rs72.3bn as of Dec-24- end vs Rs41.2bn QoQ. SA gross debt was down 7% QoQ. Management is hopeful of LPG subsidy by FY25-end. Capex intensity should increase with FY25E/26E/27E target of Rs164bn/Rs185-190bn/Rs200-220bn. We cut FY26- 27E earnings 9-10% each, assuming lower GRMs, but retain FY25E EPS factoring in LPG subsidy of Rs50bn in Q4.

Outlook

We are constructive on OMCs given a smooth political scenario post-Delhi elections. Sharp spike in oil price is a key risk. We maintain BUY, rolling over TP to Dec-25E at Rs375 (down 7%).

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BPCL - 24012025 - emkay