BPCL posts better-than-expected results for Q4; stock up 2%

BPCL share price: Shares of Bharat Petroleum Corporation Ltd (NSE: BPCL) climbed nearly 2 per cent on NSE on May 23, a day after the company released its March quarter (Q4FY23) numbers. At closing, BPCL's scrip stood at Rs 366.20 on the NSE, up 1.27 per cent.

The earnings release showed that the oil marketing company registered a standalone profit of Rs 6,477.7 crore for Q4FY23 against Rs 1,959.6 crore registered in the December quarter while the profit was estimated at Rs 5,500 crore. The company’s revenue during the quarter under review was down 0.9 per cent to Rs 1,18,112.1 crore from Rs 1,19,158.1 crore logged in the previous quarter but was still higher than the estimate of Rs 1,09,500 crore. BPCL’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) were up 2.6 times to Rs 11,153.7 crore as compared to Rs 4,233.9 crore quarter-on-quarter (QoQ).

The company’s margin — a key measure of profitability for a business — rose to 9.4 per cent in the March quarter against 3.5 per cent QoQ. BPCL’s refining throughput was up 13.2 per cent to Rs 10.63 million metric tonne (MMT) against 9.39 MMT in the December quarter.

The Board of Directors has recommended a dividend of Rs 4 per equity share of the face value of Rs 10 each, for the financial year ended March 31, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM). The dividend would be paid within 30 days from the date of its declaration at the AGM.  

Morgan Stanley has maintained an ‘Overweight’ rating on BPCL for a target price of Rs 390 apiece. According to the brokerage, core earnings have beaten the estimates with a strong refinery margin of $20/bbl. Further, the brokerage expects the strong margin to continue.

Jefferies has maintained a ‘buy’ call on BPCL for a target price of Rs 445 apiece. According to it, the March quarter EBITDA and gross refining margin were ahead of the estimates. Further, the report stated that the marketing segment can be weaker on higher inventory losses and weakness in refining should reverse benefiting BPCL. The brokerage believes that inflated marketing margins should normalise.

"Though BPCL is looking lucrative at current levels, one needs to consider that for the last 6 months it has given a 29 per cent return already. On the flipside, weekly relative strength index is sustaining above 50 levels which is positive for the counter. The fresh buy will only trigger above the daily close of 375 for a target of 400 and stop-loss would be 365 on daily close basis," said Jigar S Patel - Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers.

BPCL share price history

On a year-to-date (YTD) basis, BPCL stock has risen over 10 per cent as compared to Nifty50’s rise of over 1 per cent. On a six-month basis, the stock rose over 19 per cent against Nifty50’s rise of over 0.65 per cent.

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