This Oil Sector PSU Stock Trading 2.21% Down 52 Week High, Buy For High Returns, Says ICICI Direct

ICICI Direct initiated a Buy on Bharat Petroleum Corporation Ltd. (BPCL) with a positive outlook. The brokerage firm has assigned a Target price of Rs 430 apiece for robust gains of up to 18%. BPCL is a large-cap Maharatna Category CPSE with a market capitalisation of Rs 79,524.81 crore.

Q4FY23 Results

According to ICICI Direct, BPCL reported higher-than-expected earnings in Q4FY23. Revenue was up 8% YoY, flat QoQ to Rs. 133413.8 crore in line with I-direct estimate of Rs. 130263 crore. GRM was above our estimates at US$20.58/bbl (I-direct estimate: US$10/bbl). EBITDA came in at Rs. 11153.7 crore, up 86.3% YoY, 163% QoQ (on a weak base), above I-direct estimate of Rs. 7772.4 crore. There was an exceptional expense of Rs. 1359.96 crore for impairment of investment in its subsidiary Bharat PetroResources (BPRL). PAT was at Rs. 6477.7 crore vs. I-direct estimate: Rs. 5489 crore.

Buy for a Target Price of Rs. 430 apiece

According to ICICI Direct, BPCL's operating profit improved QoQ due to strong refining margins and improvement in marketing margins. "In the current quarter, refining margins are likely to be subdued but countered by strong marketing margins. However, we expect refining margins to improve in H2FY24 with a rise in demand. BPCL has also set a capital outlay of Rs. 1.4 lakh crore over the next five years for expanding into petchem, renewable energy and CGD business," the brokerage has said.

It added, "We revise our rating on the stock from HOLD to BUY. We value BPCL at Rs. 430 i.e. average of P/BV multiple: Rs. 450/share(i.e. ~1x P/BV) and P/E multiple: Rs. 410/share( i.e. ~8x P/E on FY25E EPS)."

Stock Outlook

The stock last traded at Rs. 366.60 apiece, up 1.38% from its previous close of Rs. 361.60 apiece. Its is trading 2.21% down from its 52 week high of Rs. 374.90 apiece, which it recorded on 11 May 2023. Its 52 week low is Rs. 288.05 apiece, recorded on 20 October 2022.

Stock jumped 1.19% in 1 week, 5.89% in 1 month, and 14.37% in 3 months, respectively. In 1 yer, it has given 10.39% positive return and in 3 years, it has given 16.31%, respectively. In 5 years, it has fallen 1.97%.

About - Bharat Petroleum Corporation Ltd. (BPCL)

Bharat Petroleum Corporation (BPCL) is a public sector refining & marketing company. BPCL operates more than 19000 retail outlets across the country. Petrol & diesel together constituted 76% of marketing sales in FY23.

Disclaimer - The stock has been picked from the brokerage report of ICICI DIrect. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.