Why are brokerages so bullish on BPCL? Anil Singhvi decodes the stock, triggers and risk too

BPCL has been in the news in recent days over divestment talk and it has caught the attention of big brokerages too, including JP Morgan. Varun Dubey, Senior Research Analysts at Zee Business spoke to Managing Editor Anil Singhvi and said that the report highlights that divestment in BPCL could happen in the range of Rs 700-Rs 750.

The report said that it is important to monitor who all are bidding in the consortium. The interested parties are valuing BPCL at Rs 80000 cr for 50% to 52% stake that is with the Government. Rising Crude prices will benefit BPCL’s valuation and normalization of GRMs will also benefit the company going forward. BPCL share price today is Rs 437, down Rs 2.4 or 0.5%.

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Varun said upgrading the Kochi Refinery will also benefit the company and the valuations will improve further. FY23 EPS for BPCL could be at Rs 48 per share and considering this, the implied fair value of the share comes in at Rs 690 per share. The Government of India will surely charge a little premium to the implied fair value to go ahead with the Divestment.

BPCL पर क्यों बुलिश दिग्गज ब्रोकरेज?

किस भाव पर हो सकती है हिस्सा बिक्री?

BPCL में तेजी के लिए और क्या हैं ट्रिगर?#BPCL #JPMorgan @AnilSinghvi_ @VarunDubey85 pic.twitter.com/KKqen8NY80

— Zee Business (@ZeeBusiness) March 23, 2021

Anil Singhvi said that Zee Business had done a show on BPCL divestment a week ago from Investment Banking sources, who quoted similar numbers like JP Morgan. The only risk in BPCL Divestment is that if the Divestment itself doesn’t happen, says Singhvi. If at all the divestment happens it will happen at good valuations for sure.