Motilal Oswal's research report on BPCL
BPCL delivered a 46% beat on EBITDA in 4QFY25, driven by higher-than-estimated GRM (USD9.2/bbl) and marketing margins (INR5.9/lit; INR 0.3/lit due to inventory gain). While BPCL booked an exceptional loss of INR17.7b due to the impairment of investment in BPRL, adj. PAT came in at INR45.5b (71% above our est.). While we think the rally in OMC stocks is now entering the last phase, we still see a few positive catalysts: 1) 1QFY26 earnings will likely benefit from lower LPG underrecoveries due to an INR50/cyl domestic LPG price hike recently. The decline in propane prices as winter demand wanes provides additional upside; 2) Russian crude proportion for OMCs is expected to rise again in 1QFY26, supporting GRMs; 3) marketing business earnings momentum has remained robust.
Outlook
BPCL currently trades at 1.5x 1yr. fwd. P/B vs. 10Y average of 1.8x. We maintain our Neutral rating on the stock with a revised TP of INR300.
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