BPCL Q1 Results Review - Rights Issue, Capex Cloud The Beat: Nirmal Bang

Nirmal Bang Report

Key Points

• Bharat Petroleum Corporation Ltd.’s Q1 FY24 beat (26% in profit after tax) was driven by 21% beat in marketing Ebitda per tonne at Rs 8,417, 2% beat in total marketing sales volume - 13.1 million tonnes and 4.8% beat in refining throughput - 10.4 million tonnes.

• Gross refining margin at $12.64/barrel of oil was 12.8% below estimate due to miss in Mumbai/Bina/Kochi GRMs by 29.6%/16.7%/10.9%.

• We have raised estimates by 57%/17.6% for FY24E/FY25E based on the beat in Q1 FY24 results and higher retail margin/refining throughput assumptions.

• We have raised target price only a tad to Rs 401 as we have cut the target price-to-earning from six 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 Rs 180 billion for energy transition/security projects and 2040 net-zero target.

• We maintain 'Accumulate' rating on BPCL based on the muted risk-reward as the stock has rallied 14% year-to-date. We await clarity on rights issue timeline, pricing, size and specific use of the proceeds.

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