Bharat Petroleum Corporation Ltd. reported a strong turnaround in its September quarter performance, returning to profitability on the back of improved refining margins. Brokerages Citi and Jefferies maintained their Buy ratings on the stock, citing resilient refining performance and attractive valuations. However, both flagged concerns around the outlook for marketing margins amid elevated crude oil prices.
Q2 Results Highlights
- Net profit stood at Rs 4,993 crore, against a loss of Rs 3,962 crore in the June quarter.
- Ebitda rebounded to Rs 8,971 crore from a loss of Rs 4,078 crore in the previous quarter.
- Revenue declined 1.07% sequentially to around Rs 1.58 lakh crore.
Also Read: BPCL Q2 Results: Profit Swings To Rs 4,993 Crore From Loss, EBITDA Rebounds
Citi: Maintains Buy, Target Price At Rs 360
Citi remains positive on BPCL, citing a resilient September quarter performance despite some moderation in refining profitability. While marketing performance improved, the brokerage expects this segment to face renewed pressure in the December quarter.
- Citi maintained its Buy rating on BPCL with a target price of Rs 360.
- Refining profitability moderated but remained healthy, supporting the overall performance.
- Marketing performance improved during the September quarter, although the outlook for the December quarter remains challenging.
Jefferies: Buy Maintained, Target Price Cut To Rs 380
Jefferies retained its positive view on BPCL after the company delivered refining-led earnings beat for the second consecutive quarter. However, the brokerage lowered its target price, citing pressure on marketing margins amid elevated crude oil prices, while highlighting the stock's relative valuation appeal.
- Jefferies maintained its Buy rating but cut its target price to Rs 380 from Rs 410.
- The brokerage attributed the earnings beat primarily to refining performance and considers the stock's valuation favourable.
- BPCL delivered a stronger performance for the second consecutive quarter, supported by its refining business.
- With the Indian crude basket at around $120 per barrel, marketing margins are deep in the red, posing a challenge to near-term earnings.
- The stock has declined 28% since the start of the conflict and trades at a discount to Hindustan Petroleum Corporation Ltd., despite having a higher return on equity.
Thus, overall, brokerages remain bullish on BPCL, supported by its strong refining performance and attractive valuations. However, sustained high crude oil prices and pressure on marketing margins remain key risks to watch, particularly as the December quarter could pose fresh challenges to earnings.
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