Analysts hopeful of BPCL's recovery post strong Q4

Mumbai: A handful of analysts raised their price targets on Bharat Petroleum Corp (BPCL) after the state-owned oil refiner posted strong fourth-quarter earnings. The company's standalone net profit surged 159% aided by refining margins.

Shares of BPCL surged as much as 2.6% before closing the day at ₹366.20 apiece on the NSE, up 1.27% from the previous close.

CLSA raised its price target that anticipates a 31% upside in BPCL's shares from the current levels as strong demand for oil products and a decline in crude oil prices support the recovery in OMCs.

Motilal Oswal expects state-owned oil refiners to see further improvement in marketing performance in the upcoming quarters. "Brent has softened considerably to ~$75 per bbl in May'23 YTD from $96 per bbl in FY23, which bodes well for the stock," the brokerage said.

BPCL's staggering profit in the fourth quarter also helped the company post a profit for FY23, helping it recover the losses incurred in the first half of the fiscal when state-owned oil refiners were forced to hold petrol, diesel and LPG prices despite a surge in cost.

Trading volumes in BPCL shares spiked to over 6.2 million shares on BSE and NSE, up 2.3 times its combined average daily volume.

JM Financial said BPCL and other OMCs' integrated margin has improved with lower crude price and the normalisation of product cracks. "However, BPCL's earnings will continue to be contingent on volatility in crude price/product cracks and further risk to OMCs' marketing pricing freedom."

Brent crude oil futures hovered around $75-76 a barrel in Tuesday's trading as against $88-90 a barrel seen two months ago.