Motilal Oswal is bullish on BPCL has recommended buy rating on the stock with a target price of Rs 465 in its research report dated August 13, 2019.
Motilal Oswal's research report on BPCL
BPCL reported a GRM of USD2.8/bbl, lower than our estimate of USD3.0 and USD7.5 in 1QFY19. Consequently, EBITDA was down 53% YoY/QoQ at INR21.5b, despite a decline of INR1.6b in other expenses. Adj. EBITDA was up 37% YoY at INR26.0b, with the refining inventory loss at INR1.3b and the marketing inventory loss at INR3.3b. Forex gain was at INR0.3b for the quarter (v/s a loss of INR7.1b in 1QFY19 and a gain of INR2.8b in 4QFY19). Reported PAT was at INR10.8b (-53% YoY). BPCL has reported first-quarter earnings based on Ind-AS 116. Depreciation expense increased by 24% YoY and interest cost by 50% YoY. PBT came in at INR13.5b (and at INR14.0b adjusting for Ind-AS impact of INR0.5b).
BPCL is trading at 9.1x FY20E consol. EPS of INR37.7 and 7.5x FY20E EV/EBTIDA. We value BPCL at 1.9x FY21E PBV multiple. We reiterate our Buy rating with a target price of INR465.
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