With a market capitalization of Rs. 1,44,472 crores, the shares of the company started Friday’s trading session, on a higher note at Rs. 666 compared to its previous close of Rs. 652.
During the trading session, the shares hit a high of Rs. 697.95, gaining around 3 percent, also recorded as the company’s fresh 52-week high and are currently trading at Rs. 663 apiece.
Looking at the Bharat Petroleum Corporation Ltd’s financial statements, the revenue increased by 12 percent from Rs. 1,03,044 crores during the September quarter to Rs. 1,15,499 crores in the December quarter. On a contrasting note, the net profits declined by 62 percent from Rs. 8,244 crores to Rs. 3,181 crores during the same period.
Comparing these metrics on a YoY basis, the revenue decreased marginally by 3 percent from Rs. 1,19,170 crores in Q3FY23 to Rs. 1,15,499 crores during Q3FY24. On the other hand, the net profits magnified by 82 percent from Rs. 1,747 crores to Rs. 3,181 crores during the same timeframe.
Jefferies, one of the well-known international investment banks has given a ‘Buy’ target on the company’s stock with a target of Rs. 890 indicating a potential upside movement of around 34 percent compared to its current market price.
Jefferies has corrected its concern in the 90 to 130 percent rally in shares of oil marketing companies since October and regained confidence in the OMC stocks on the back of stable prices and government restraint.
Furthermore, the Brokerage firm expressed concern over possible government intervention in retail fuel prices leading up to the elections. But now, Jeffries mentioned that they are more confident about the strength in the sector, and appeared optimistic about normative marketing margins in FY25.
Moreover, the Broker said that the Red Sea disturbances boosted refining margins, and the diesel marketing loss may be temporary, with potential post-election price hikes. With a Goldilocks outlook and the expectation of OMC multiples returning to past peaks, and mentioned that BPCL offers the greatest margin of safety.
In addition to this, Jefferies mentioned that despite geopolitical events in the Middle East and militancy in the Red Sea, since November, crude oil prices have stayed within the 75 to 85 dollar range, even though the Red Sea disruption affects around 10 percent of global crude shipments.
To conclude, with a Goldilocks outlook and the expectation of OMC multiples returning to past peaks, and Jefferies believes that BPCL offers the greatest margin of safety, so they have upgraded the shares of Bharat Petroleum to Buy and increased its target price to Rs 890 a share.
Headquartered in Mumbai, Bharat Petroleum Corporation was incorporated in 1952. It is an Indian public sector undertaking that engages in the exploration, production, refining, and marketing of petroleum products.
Written By Vaibhav Patil
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