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Anand Rathi Report
After a record FY24, Bharat Petroleum Corporation Ltd.'s Q1 Rs 56.5 billion/Rs 30.1 billion Ebitda/profit after tax was in step with our estimates, though YoY they fell 64%/71% due to lower refining margins ($7.9/ barrel fo oil versus $12.5 last year).
Q1 standalone debt fell to Rs 152 billion versus Rs 279 billion last year, aided by strong profitability. For FY25, we have modelled conservative refining/marketing margins.
We prefer the Corporation to peers, given its strong balance sheet and likely monetisation of overseas E&P assets in Mozambique LNG in CY24.
We retain our estimates and a Buy rating, but with a higher 12-month target price of Rs 379 (Rs 344 earlier), six times FY26E enterprise value/Ebitda (5.5 times).
Risks: Lower GRMs, change in crude oil prices, inventory losses, adverse government policies such as subsidy-sharing and weak marketing margins.
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