1:2 & 1:1 Bonus Issues Record Date Nears; HPCL Vs BPCL, Time To BUY These 2 Maharatna PSU Oil & Gas Stocks?

One of the much-awaited bonus issues is right around the corner on BSE and NSE. And it is of none other than two Maharatnas who have given Maha returns in the long term. They are leading oil and gas stocks that offer products like petrol, diesel, and LPG to Indian customers. And both the stocks will turn ex-bonus on June 21. Who are they? DRUM ROLL! They are HPCL and BPCL.

The start of this week's trading session has been a mixed bag for both HPCL and BPCL. On June 18, when HPCL stock tumbled, BPCL witnessed a buying trend. Nonetheless, both stocks are near their 52-week highs. Meanwhile, in a year, HPCL surged by a whopping 94% and BPCL gained by a massive 68%. YTD, HPCL is up by 33% and BPCL rallied by 40%.

With the stocks near their highs, and turning ex-bonus, is it the time to buy the two stocks?

HPCL Share Price:

HPCL stock is currently at Rs 530.20 apiece on BSE, down by 1.13% on June 18 with a market cap of Rs 75,211.43 crore. The stock's 52-week high and low is at Rs 594.70 apiece and Rs 239.25 apiece respectively.

At the latest, IIFL Securities have maintained ADD on HPCL with a target price of Rs 600. Meanwhile, Motilal Oswal has also set a target price of Rs 600 on HPCL but with a BUY recommendation.

HPCL remains Motilal's preferred pick among the three OMCs. The other two OMCs are BPCL and Indian Oil. Motilal sees the following as key catalysts for the stock: 1) the demerger and potential listing of the lubricant business, 2) the commissioning of its bottom upgrade unit, and 3) the start of the Rajasthan refinery in 4QFY25.

HPCL will turn ex-bonus on June 21 which is also the record date for its upcoming reward. The company will deliver bonuses in the ratio of 1:2. This would mean that 1 bonus share for free on existing 2 equity shares.

So for instance, if you hold 500 shares of HPCL, then you will receive bonus shares of 250 (500 x 1/2). This will take the total number of shares to 750 equities in HPCL. This is an example. The bonus rewards will increase your portfolio depending upon the number of shares an investor is holding.

BPCL Share Price:

On June 18, BPCL stock stood at Rs 630.95 apiece, up by 0.7% on BSE with a market cap of Rs 1,36,869.00 crore. The stock's 52-week high and low is at Rs 687.65 apiece and Rs 331.50 apiece respectively.

IIFL in its latest report has suggested BUY on BPCL with a target price of a whopping Rs 800. On the other hand, Antique Stock Broking recommends BUY with a target of Rs 770 apiece.

Also, analysts at Systematix Group prefer BPCL and HPCL over Indian Oil. However, the brokerage does not provide ratings on OMCs.

For BPCL, Systematix said, "BPCL is also spending up to Rs 400bn on an ethane-fed cracker at its Madhya Pradesh refinery, which can process 156,000bpd, post-expansion the companies will opt for export opportunities to reach optimum capacity utilization."

Unlike HPCL, BPCL is set to offer double rewards. BPCL fixed June 22 as the record date to determine eligible shareholders for the 1:1 bonus issue. Since the record date is on the weekend, the ex-bonus date of BPCL will be on the last trading day of the current week which is June 21. The ratio of 1:1 means that 1 existing equity shareholder of BPCL will receive 1 free bonus share. The face value is Rs 10 each.

Example: Taking the similar example, if an investor holds 500 shares of BPCL. Then at 1:1 ratio, he or she will receive 500 bonus shares against existing 500 shares (500x1). This will double the number of shares to 1,000 in BPCL.

Also, BPCL plans to deliver a final dividend of Rs 21 per share for FY24, having a face value of Rs 10 each (pre-bonus), which translates into a final dividend of Rs.10.5/- per equity share of the face value of Rs.10/- per equity share) (post-bonus). The final dividend would be paid within 30 days from the date of its declaration at the AGM. The Record Date for the final dividend will be intimated separately.

HPCL has a strong presence in the Refining & Marketing of Petroleum Products in the country. HPCL owns and operates Refineries at Mumbai & Visakhapatnam with design capacities of 9.5 MMTPA & 8.3 MMTPA respectively. HP Green R&D Centre at Bengaluru is a state-of-the-art research facility for driving innovation in HPCL.

Meanwhile, BPCL aims to efficiently meet the energy needs of our nation with a combined refining capacity of over 40 MMT through refineries in Mumbai, Kochi, Numaligarh and Bina, which are strategically located.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.