BPCL Q1 Review: PL Capital Upgrades The Stock To 'Hold' On Strong Marketing Margins — Check New Target Price
PL Capital upgrades the stock from ‘Reduce’ to ‘Hold’ rating and revises target price based on 1.5x FY27 price/book value as benign oil prices may raise marketing margins further.
BPCL's refining throughput stood at 10.4 mmt during the quarter vs 10.1mmt in Q1 FY25 and 10.6mmt in Q4 FY25. Reported GRM stood at $4.88/bbl vs $7.9/bbl in Q1 FY25 and $9.2/bbl in Q4 FY25. Singapore gross refining margin stood at $5.8/bbl during the quarter.
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PL Capital Report
Bharat Petroleum Corporation Ltd. reported gross refining margin of $4.88/bbl (our estimate: $7.1/bbl) and gross marketing margin of Rs 8.4/lit (our estimate: Rs 7.6/lit). Better-than expected marketing margin compensated worse-than-expected gross refining margin resulting in marginally lower standalone Ebitda of Rs 96.6 billion (our estimate: Rs 102.6 billion, BBG estimate: Rs 103.1 billion, +71% YoY, +24.4% QoQ).
Lower-than-expected depreciation and interest cost bridged the variance on PBT (reported Rs 81.6 billion, BBG estimate: Rs 82.7 billion). PAT came in at Rs 61.2 billion (our estimate: Rs 61.8 billion, BBG Rs 66.8 billion, +103% YoY, +91% QoQ).
The previous quarter had a hit of Rs 17.7 billion on account of write-offs in BORL. We build in GRM of $6.5/7.5/bbl in FY26/27 and marketing margin of Rs 5.1/4.6/ltr for FY26/27.
The stock is currently trading at 1.6/1.5x of FY26/27 P/BV. We upgrade the stock from ‘Reduce’ to ‘Hold’ rating with a target price of Rs 333 (earlier Rs 311) based on 1.5x FY27 price/book value as benign oil prices may raise marketing margins further.
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