BPCL jumps 4% despite weak Q4 results; Citi maintains 'buy' rating on PSU
Shares of Bharat Petroleum Corporation (BPCL) gained 4 percent on May 10 despite the company's Q4 earnings missing street expectations on lower refining margins. The rise comes as Citi maintained a bullish call on the stock despite below-estimate earnings.
The Maharatna public-sector undertaking (PSU) posted a consolidated net profit of Rs 4,789.57 crore, down 30 percent on-year. Its turnover was almost flat YoY at Rs 1.32 lakh crore during the quarter under review.
Although BPCL reported a refining-led miss, there was a quarter-on-quarter recovery in EBITDA. The company's board has also approved a bonus issue in the proportion of 1:1, where investors get one extra share for every one share held in the company.
Citi has issued a 'buy' call on BPCL with a target price of Rs 760. The company's pre-tax profit came in 20 percent below the brokerage's estimates, and net income saw a 39 percent decline due to a Rs 1,800 crore impairment of investments in an arm.
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Despite this, the full-year FY24 EPS remained strong at Rs 125 per share, analysts noted.
According to Morgan Stanley, Indian fuel refiners posted strong quarterly earnings, indicating a structural shift towards higher profitability in FY24.
The investments made in refinery hardware are beginning to yield results. BPCL notably outperformed in margin, while HPCL managed to gain market share in fuel, the international brokerage noted.
BPCL said it achieved an average ethanol blending percentage of 11.69 percent during FY24 with the highest blending in the fourth quarter of FY24 at 12.15 percent. It added 308 new petrol pumps, taking total network strength to 21,840. Also, 323 CNG stations were commissioned, taking their total count to 2,031.
"A planned capital outlay of Rs 1.7 lakh crore over a period of 5 years, will fuel our next wave of growth to create long term value for our shareholders," said G Krishnakumar, chairman and managing director, BPCL.
He added that BPCL plans to expand its refining capacity to 45 million tonnes per annum from current 35.3 million tonnes, and add 4,000 new fuel stations by FY29.
Also Read | BPCL Q4 net profit falls 30% to Rs 4,789 cr; company announces 1:1 bonus issue
On the outlook for FY25, the chairman said, "We remain cautiously optimistic and expect the crude oil prices to remain in the range of $83-87 per barrel in the near future.
While geopolitical tensions and supply chain disruptions are potential hurdles, we're prepared to navigate these uncertainties with agility.''
In the previous session, the share ended 3.8 percent higher at Rs 615.00 on NSE.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.