Reduce Bharat Petroleum Corporation; target of Rs 547: Prabhudas Lilladher

Prabhudas Lilladher's research report on Bharat Petroleum Corporation

Bharat Petroleum Corporation (BPCL) reported better than expected Q4FY24 results with an EBITDA of Rs92.1 bn (up 48% QoQ, PLe: Rs85.8 bn). Adj PAT came in at Rs55.7 bn (up 64% QoQ, PLe: Rs48.4 bn). The company reported a moderate GRM at US$12.5/bbl. GMMs as per our calculation came in at Rs5.8/ltr. BPCL announced a bonus of 1:1 and a final dividend of Rs21/share. The company currently trades at 1.5x FY26 P/BV.

Outlook

Going ahead, owing to demand concerns in the long term and inability to pass on rise in fuel costs we build in GRMs of US$6/bbl and a gross marketing margin of Rs 4.1/ltr for FY25/26E. The stock is currently trading at 1.6/1.5x FY25/26 P/BV. We re-rate the stock from ‘Sell’ to ‘Reduce’ with a TP of Rs547 based on 1.3x FY26 P/BV.