Brokerages bullish on BPCL as company returns to profit in Q3FY23 after 2 quarters; elevated oil prices, inability to revise prices major headwinds

Shares of Bharat Petroleum Corporation Limited (BPCL) edged higher after the oil marketing company reported profit in the December quarter of this fiscal, its first in this financial year. The company had posted losses in the June and September quarters on higher crude oil prices.

The stock was among the top Nifty50 gainers on Tuesday and jumped nearly 5 per cent to Rs 351.5 per share on the BSE on an intraday basis.

At around 10:40 am, the counter was up by nearly Rs 10 or 3 per cent or to Rs 344.8 apiece on the exchanges. In contrast, the benchmark S&P BSE Sensex was down 0.36 per cent ahead of Budget 2023.

BPCL’s Q3 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) recovered sharply on a quarter-on-quarter basis driven by better refining and lower auto fuel under-recovery. The state-run company’s gross refinery margin of USD 15.9 per barrel remains strong in Q3.

Brokerages View

“Our key worries continue to be oil prices remaining elevated and OMCs’ inability to revise retail fuel prices,” Kotak Institutional Equities said, maintaining a ‘sell’ rating with increased target of Rs 315 from Rs 310 per share earlier.

Also Read: BPCL to set up 1 GW renewable energy plant in Rajasthan

On the contrary, ICICI Securities reiterated a ‘buy’ rating on the stock with target of Rs 414 per share as it believes a relatively stress-free balance sheet and a complex refining portfolio along with a significant upstream presence are BPCL’s strengths and earnings will likely bottom out in FY23E.

Similarly, global brokerages are also bullish on BPCL as CLSA and Jefferies each give a ‘buy’ rating with a target price of Rs 405 and Rs 445 per share, respectively.

Share Price History

BPCL shares have corrected more than 13 per cent in the last one year, while it has gained nearly 3 per cent in the last six months.

The counter is nearly Rs 50 or 12 per cent away from its 52-week high of Rs 399.8 per share exactly an year-ago today. It has gained more than 22 per cent from its 52-week low hit on October 20, 2022.