Analysts see up to 20% upside in BPCL shares post Q4 show, stock among top Nifty gainers

Morgan Stanley expects BPCL to continue witness strength in margin. It has an ‘overweight’ rating on shares of the company with a target price of Rs 390 while Jefferies has maintained its ‘buy’ call on shares of BPCL with a target price of Rs 445.

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With analysts being bullish about the growth prospects of the second-largest government-owned oil producer, BPCL shares are among the top gainers on Nifty 50 index, up around 2 percent. Brokerage firms see an upside of up to 20 percent from today’s high of Rs 371.95.

At 11:43 am, shares of BPCL was up 1.8 percent at Rs 368 on the BSE.

The state-owned company reported a 159 percent surge in standalone net profit at Rs 6,478 crore for the March quarter, beating Street estimates. According to the poll conducted by CNBC-TV18, the company was expected to report a net profit of Rs 3,981 crore. Revenue was up 8 percent YoY to Rs 1.33 lakh crore.

Analysts believe BPCL’s marketing performance can improve in the upcoming quarter as Oil Marketing Companies (OMCs) are estimated to be generating gross margins of Rs 9.1 on petrol and Rs 11.6 on diesel in 1Q of FY24 till date due to a decline in crude oil prices.

Morgan Stanley expects BPCL to continue witness strength in margin. It has an ‘overweight’ rating on shares of the company with a target price of Rs 390 while Investec has maintained ‘hold’ rating with a hike in target price to Rs 375 from Rs 320.

Morgan Stanley said that the company’s core earnings beat estimates on the back on strong refinery margin of $20 per barrel. Investec highlighted that BPCL reported a 35 percent beat on consensus EBITDA estimates primarily driven by higher-than-expected refining and marketing margin. Investec has also increased its EPS estimate for FY24 by 11 percent and by 10 percent for FY25.

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Jefferies has maintained its ‘buy’ call on shares of BPCL with a target price of Rs 445.

Besides, JM Financial Institutional Securities highlighted that the board approved a dividend of Rs 4 per share or 40 percent payout against a dividend of Rs 16 per share paid in FY22, implying 39 percent payout. The brokerage firm has maintained its ‘buy’ call on the stock with a revised target price of Rs 415 on valuations as the stock is trading at 1.1 times its FY25 Price to book, and as OMCs’ integrated margin has improved with lower crude price and normalisation of product cracks.

Even Nuvama Institutional Equities has reiterated its ‘buy’ recommendation on the stock as it is confident about BPCL’s gross refining margin even as that shall remain subdued in the near term on anticipated recession fears. The brokerage firm has hiked its FY24 and FY25 EBITDA by 5 percent and target price by 5 percent to Rs 442 on strong growth prospects.

Another factor that drove selling in the stock was a reduction in debt. Debt declined by Rs 44 billion QoQ to Rs 359 billion at end of March quarter.

Motilal Oswal Financial Services highlighted that there is no update on the divestment roadmap for BPCL now. The brokerage firm has maintained its ‘neutral’ rating on shares of BPCL with a target price of Rs 360.