BPCL shares at Rs 315 or Rs 530? What analysts said post surge in Q4 profit

Share price targets for Bharat Petroleum Corporation Limited (BPCL) post the oil marketing company's March quarter results suggest up to 44 per cent potential upside on the counter. That said, a many brokerages see only a limited upside for the stock ahead. Price targets by a few brokerages stayed in the Rs 315-530 range, with brokerages such as Motilal Oswal Securities, Emkay Global, Morgan Stanley, BofA Securities and Investec suggesting sub-Rs 400 targets. The scrip settled at Rs 361.50 on Monday.

Motilal Oswal said BPCL's gross refining margin (GRM) $20.6 a barrel was above its estimate of $17 a barrel but the implied marketing margin stood at Rs 2.9 per litre, which was lower than its estimate of Rs 4.5 per litre.

"BPCL’s marketing performance can improve further in the upcoming quarter as OMCs are estimated to be generating gross margins of Rs 9.1 on petrol and Rs 11.6 diesel in June quarter due to decline in crude oil price to Rs 6,478 crore on the back of a recovery in fuel marketing margins and better refining margins. There is no update on the divestment roadmap for BPCL now," it said while valuing the stock at Rs 360.

BPCL reported more than doubling of net profit at Rs 6,478 crore for the March quarter on the back of a recovery in fuel marketing margins and better refining margins. The jump in fourth-quarter net profit helped the company post Rs 1,870.10 crore of net profit for FY23, by negating the losses the firm had to suffer in the first half of the financial year from holding petrol, diesel and LPG prices despite a surge in cost.

Emkay Global said it has slightly raised its target multiple for ONGC to 5.6 times FY25E EV/Ebitda and revised its target by 13 per cent to Rs 395 per share. While earnings outlook is steady, there are system-wide risks, given BPCL’s new Rs 50,000 crore capex plan and upcoming national elections, the brokerage said while retaining its Hold rating on the stock.

Nuvama Institutional Equities said BPCL's operating cash flow(pre-working capital) declined 36 per cent YoY to Rs 13,400 crore on subdued operations. GRMs shall remain subdued in the near term on anticipated recession fears, it said.

"We, however, reiterate our thesis of Golden refining era, expecting over $10 GRMs post-2024. We hike FY24/25 Ebitda estimates by 5 per cent each and target price by 5 per cent to Rs 442 on strong growth prospects," it said.

Jefferies has a target of Rs 445, Morgan Stanley finds the stock worth Rs 390 while Investec has a target of Rs 375 on BPCL. BofA Securities, meanwhile, has a target of Rs 315 for the stock.

"Adjusting for export taxes (our estimate of $9 per barrel), the realised GRM is likely to be around USD 16.7/bbl. While GRMs have moderated recently, marketing margins on petrol/ diesel as well as LPG have more than madeup for the moderation and recovered strongly. We maintain BUY with a target price of Rs 529 (earlier INR 537) as we roll forward our target to FY25 from 1HFY25 earlier and also cut EV/EBITDA multiple from 6 times to 5.75 times," said Antique Stock broking.