Upcoming: 1:1 Bonus After 7 Yrs, Rs 21/Sh Dividend Highest In 3 Yrs; Buy PSU Oil Company BPCL, Rs 760 TP

Leading oil marketing company and also government-owned with a status of Maharatna, BPCL reported growth sequentially in Q4FY24, however, year-on-year, the performance was lower. Nonetheless, that has not stopped brokerages from liking this PSU stock. Giving a positive outlook, global brokerage CITI has recommended BUY, while Motilal Oswal has maintained a Neutral on the stock.

Apart from Q4, BPCL also declared a 1:1 bonus issue for the first time in 7 years, while recommending Rs 21 per share dividend which is the highest in 3 years.

On BSE, BPCL's share price stood at Rs 618.60 apiece, up by 4.44% on May 10 with a market cap of Rs 1,34,189.97 crore. The stock is nearing its 52-week high of Rs 687.65 apiece. Citi has set a new all-time high target.

BPCL Bonus Shares:

The company's board has recommended the issuance of bonus shares in the ratio of 1:1. Meaning that 1 new bonus equity share will be allotted free of cost against 1 existing BPCL share held by investors. The face value of these shares is Rs 10 each.

BPCL has fixed June 22, 2024, as the record date to determine the eligibility of shareholders to receive bonus shares.

BPCL Dividend:

BPCL also recommended a final dividend of Rs. 21/- per equity share of the 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.

For FY24, earlier, the company delivered a Rs 21 per share dividend for which it turned ex-dividend on December 12, 2023. Taking the latest dividend, BPCL's total dividend payout is about Rs 42 per share.

BPCL Share 2024 Target Price:

Citi has maintained BUY for a target price of Rs 760 per share. The outlook is given POSITIVE.

Meanwhile, brokerage Motilal Oswal said, BPCL's refining throughput was in line with our estimate at 10.4mmt (-3% YoY) during the quarter. Reported GRM was lower than our estimate at USD12.5/bbl (vs. our estimate of USD17.1/bbl and USD9.9/bbl in 3QFY24). Marketing volumes, excluding exports, were in line with our estimate at
13.2mmt (+2% YoY)."

Further, the brokerage highlighted that during 4QFY24, BPCL had impaired investments of INR18b in its subsidiary company BPRL due to a change in prospects of its blocks. The accumulated impairment loss on investments in BPRL as of Mar 31, 2024, is INR52b.

Motilal Oswal has maintained Neutral on the stock, while its target price is expected in due course.

On a consolidated basis, BPCL posted a net profit of Rs 4,789.57 crore in Q4FY24, lower from PAT of Rs 6,870.47 crore in Q4FY23, but better from Rs 3,181.42 crore in Q3FY24. Meanwhile, revenue from operations stood at Rs 1,32,086.86 crore, as compared to Rs 1,33,419.56 crore in Q4FY23 and Rs 1,29,984.84 crore in Q3FY24.

The Average Gross Refining Margin (GRM) of the Corporation for the year ended 3i5t March 2024 is $14.14 per barrel (FY 2022-23: $20.24 per barrel).