PSU Stocks Alert: BPCL Share Nears 52-Week High, To Declare Interim Dividend On November 29; Buy Or Sell?

One of the leading oil marketing companies, BPCL shares traded near its 52-week high levels on Thursday ahead of the interim dividend announcement next week. There is more room to buy BPCL shares for hedging up to 16% returns going ahead.

On BSE, BPCL shares gained by 0.9% to touch an intraday high of Rs 405.55 apiece. Its market cap is over Rs 87,750 crore.

The latest stock price level is near BPCL's 52-week high of Rs 407 apiece on BSE. BPCL's 52-week low is at Rs 305.55 apiece.

As per the regulatory filing, BPCL said, "This is to inform you that a meeting of the Board of Directors would be held on Wednesday, 29th November 2023, to consider the proposal of declaration of interim dividend for the Financial Year 2023-24 and fixation of Record date."

In FY23, BPCL paid a total dividend of Rs 4 per share or 40% to its shareholders from its profits. However, this was lower compared to the dividend payout of 60% or Rs 6 per share in FY22.

At the current price level, BPCL has a dividend yield of 0.99%.

During the second quarter of FY24, BPCL posted a net profit of Rs 8,243.55 crore against a loss of Rs 338.49 crore in Q2FY23. While revenue from operations stood at Rs 1,16,657.34 crore, down compared to Rs 1,28,355.72 crore in Q2FY23.

Post Q2 results, HDFC Securities said, "BPCL's reported crude throughput, including the Bina refinery, was at 9.35mmt (+6% YoY, -10% QoQ, HSIE: 9.2mmt). The overall GRM stood at USD 18.5/bbl, with Mumbai refinery GRM at USD 14.5/bbl, the Kochi refinery GRM at USD 19.7/bbl and the Bina refinery GRM at USD 28.2/bbl. We expect the GRMs to moderate going ahead on account of a decline in product cracks seen in the month of October 23. We estimate GRM for FY24/25/26E at USD 12.3/8.4/9 per bbl."

The brokerage also added that domestic marketing sales volume was at 12.2mmt (+7% YoY, -4% QoQ). The blended gross marketing margin for Q2 stood at INR 6.2/lit, down QoQ, impacted by lower gross marketing margins for petrol and diesel, owing to the rise in crude oil prices. Hence, it added, "We factor blended gross marketing margins (for all petroleum products) of INR 5.8/4.8/4.8 per lit in FY24/25/26E respectively."

Moreover, HDFC Securities revised its estimates on BPCL. The brokerage said, "We revise our FY24E EPS sharply upwards by 116% to INR 110.5, to factor in H1 performance, driven by abnormally higher marketing margins, coupled with inventory gains. Our FY25E EPS is cut by 3.8% to factor in marginally lower domestic marketing volume. Our target price is revised to INR 470/sh on account of the decline in net debt."

Accordingly, HDFC Sec's note added, "Our target price comes to INR 470/sh (5x Mar-25E EV/e for refining business, 5x Mar-25E EV/e for marketing business and pipeline businesses, and INR 133/sh for other investments). The stock is currently trading at 6.7x on Mar-25E EPS."

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