BPCL shares surge 5% after Q3 results. What should investors do?

Shares of state-owned Bharat Petroleum Corporation (BPCL) surged nearly 5% to Rs 351.5 in Tuesday's intraday trade on BSE. The company reported a consolidated net profit of Rs 1,747 crore for the December quarter -- a fall of 36% when compared with Rs 2,579 crore in the same quarter last year.

Meanwhile, revenue from operations rose 13% to Rs 1.33 lakh crore in the three months ended December, compared with Rs 1.17 lakh crore in the last-year period.

Segment-wise, revenue from downstream petroleum stood at Rs 1.33 lakh crore, compared with Rs 1.17 lakh crore last year, while that from exploration and production of hydrocarbons stood at Rs 35 crore during the quarter under review.

Other income for the December quarter came in at Rs 339 crore, down about 42%, compared with Rs 586 crore a year ago. On a standalone basis, the company's EBITDA came in at Rs 4,234 crore, with margins at 3.6%.

The company's refining throughput during the quarter stood at 9.39 (MMT) as against 9.94 in the same quarter of last year.

At 12.05 pm, the scrip was trading 2.8% higher at Rs 344.4 on BSE. However, the stock has fallen 13% in the last one year.

Should you buy, sell or hold BPCL stock? Here's what analysts say:

Motilal Oswal
Motilal Oswal reiterated its Neutral rating on BPCL with a target price of Rs 348.

"Crude prices have remained strong even as GRMs fared better than the last two quarters, which may bode well for the stock. BPCL trades at 1.2x FY24E PBV, and we value the stock at 1.2x Dec’24E P/BV to arrive at our TP of Rs 348," it said.

Kotak Institutional Equities
"We raise our FY2024-25E earnings by a modest 1-2% driven by marginally higher GRM assumption. With the recent correction in oil prices, we are less negative on OMCs, but we believe OMC’s pricing power is unlikely to return anytime soon with the government’s focus likely to be on taming inflation ahead of the general elections. We reiterate Sell rating on BPCL with a revised FV of Rs 315 (Rs 310 earlier), largely on lower debt and marginally higher EBITDA," it said.

Avishek Datta – Research Analyst at Prabhudas Lilladher
The brokerage maintained its buy rating on BPCL with a target price of Rs 420.

"Sharp correction in international diesel prices to ~$115 from the recent peak of USD 170/bbl has improved the marketing segment profitability outlook. Also, ban on the import of Russian oil products from Feb-23 will likely support refining product spreads. Global recessionary pressure along with high-interest rates will keep oil prices range-bound, despite increased demand from China," he said.

ICICI Securities
"We believe FY24E can deliver fairly normalised earnings with trends being seen in refining and now sharply higher marketing margin scenarios. Given the change in global macros and valuations of ~1x P/BV, we see material upsides from hereon. We reiterate Buy, with a revised TP of Rs 414/sh (earlier Rs 420/sh)," ICICI Securities said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)