Sharekhan has given Buy recommendation for Bharat Petroleum Corporation with a target price of Rs. 520 in its research report issued on Aug 13, 2021
Sharekhan’s research report on Bharat Petroleum Corporation
Adjusted standalone PAT of Rs. 1,551 crore (down 60.5% q-o-q) lagged ours and the street’s estimate due to miss in refining margins, slump in other income and higher depreciation. Reported GRMs were weak at $4.1/bbl (versus estimate of $5.1/bbl) while refinery throughput of 6.8mmt was inline. BPCL gained market share in diesel/petrol by 78 bps/91 bps y-o-y to 24%/25.8% in Q1FY22. Standalone debt fell by 18% q-o-q. We expect earnings to recover in the coming quarters with a recovery in volumes, structural improvement in auto fuel margins and a cyclical pick-up in GRMs. Ramp-up of PDPP project in H2FY22 could add $1/bbl to Kochi refinery GRMs. Privatisation remains a key re-rating trigger and could create long-term value for investors.
Outlook
Hence, we maintain a Buy on BPCL with an unchanged PT of Rs. 520. The stock trades 13.2x its FY2023E EPS.