BackBPCL share price declines after Q1 results; what should investors do- buy or wait?
BPCL Share Price: Shares of Bharat Petroleum Corporation (BPCL) declined in early trading on BSE after the poor reaction to the company's Q1 results. The stock has gained 17 per cent in the last year, compared to a 19 per cent gain in the Sensex.
PremiumShares of Bharat Petroleum Corporation (BPCL) declined over a per cent in early deals on BSE on Friday (July 28) after suffering a loss of about 2 per cent in the previous session due to the Street's poor reaction to the company's June quarter results. The stock opened at ₹380.95 against the previous close of ₹379.65 and soon fell over a per cent to the level of ₹373.25.
The stock has gained 17 per cent in the last one year against a 19 per cent gain in the equity benchmark Sensex.
BPCL Q1 results: On Wednesday (July 26), BPCL reported a standalone net profit for Q1FY24 at ₹10,550.88 crore. The company had reported a loss of ₹6,263.06 crore in the year-ago period. Sequentially, net profit rose 62.9 per cent from ₹6,477.74 crore in Q4FY23.
The company's total revenue from operations fell nearly 4.3 per cent on year to ₹1,28,256.65 crores during the quarter under review from ₹1,38,389.60 crore in Q1FY23. Total income dropped to ₹1,28,748.65 crore in the first quarter. It stood at ₹1,38,831.25 crore in the year-ago period.
The stock ended with a nominal gain of 0.13 per cent on Wednesday but fell 1.87 per cent on Thursday.
Read more: BPCL Q1 Results: Net profit at ₹10,550.88 crore versus loss year ago
Brokerages express diverse views
Brokerage firms have diverse views on the prospects of BPCL stock after the company's Q1 earnings.
Brokerage firm Motilal Oswal Financial Services sees a limited upside in the share price. It has a 'neutral' view on BPCL stock with a target price of ₹390.
"BPCL posted GRM (gross refining margin) of $12.6/bbl in Q1FY24, below our estimate of $16.5/bbl, while implied marketing margin at ₹9.3/lit came in line with our estimates," Motilal said.
The brokerage firm observed that the company's capex guidance for FY24 stands at ₹10,000 crore and is expected to increase to ₹15,000-17,000 crore in FY25. The company had approved a capital outlay of nearly ₹50,000 crore for the expansion of petrochemical capacity at Bina to 2.2ktpa (from 329mtpa currently) and refining capacity to 11mmtpa (from 7.8mmtpa currently) during Q1FY24.
"Brent has increased nearly $83/bbl in the last few days (versus $78.4/bbl in 1QFY24) and a further increase may affect BPCL’s performance. The next OPEC+ meeting scheduled for 3rd August 2023 will be a key near-term monitorable. BPCL trades at 1.3 times FY24E P/BV (price to book value), and we value the stock at 1.2 times FY25E P/BV to arrive at our target price of ₹390," said Motilal Oswal.
On the other hand, brokerage firm ICICI Securities maintained a buy call on the stock and raised the target price to ₹540 from ₹445 earlier.
"Even as GRM assumptions are 54 per cent lower versus FY23 levels and nearly ₹4/ltr for retail fuels (versus ₹8.8/ltr for Q1), we expect a peer-leading 113 per cent EPS CAGR for BPCL (consolidated) over FY23-FY25E (albeit helped by the 69 per cent fall in EPS in FY23)," ICICI Securities observed.
"Revival of progress at the Mozambique mega project is an additional value driver. At our revised estimates, valuations of just 5.3 times EPS / 5.1 times EV/EBITDA (based on FY25E) are unchallenging," the brokerage firm said.
Brokerage firm Nirmal Bang has an 'accumulate' view on the stock with a target price of ₹401.
The brokerage firm has raised estimates by 57 per cent and 17.6 per cent for FY24E and FY24E, respectively, based on the beat in Q1FY24 results and higher retail margin and refining throughput assumptions.
"We have raised the target price only a tad to ₹401 as we have cut the target PE from 6 times to 5.5 times on June 25E. This is due to the potential dilution in earnings from the proposed rights issue of up to ₹18000 crore for energy transition/security projects and the 2040 Net-zero target. We maintain accumulate rating on BPCL based on the muted risk-reward as the stock has rallied 14 per cent year-to-date. We await clarity on the rights issue timeline, pricing, size and specific use of the proceeds," Nirmal Bang said.
Around 9:20 am, the stock was 1.22 per cent down at ₹375 on BSE.
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Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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