ICICI Direct’s research report on Bharat Petroleum Corp
Bharat Petroleum Corporation (BPCL) reported Q3FY19 results that were below our estimates on the EBITDA front mainly on account of higher-than-expected inventory losses. Revenues increased 6.5% QoQ to Rs 88237.9 crore GRMs were at US$2.8/bbl (our estimate of US$2.3/bbl). Core GRMs of US$6/bbl were above estimate while inventory losses were at US$3.2/bbl. Also, inventory losses in the marketing segment led to EBITDA of Rs 737.4 crore, below our estimate of Rs 1044.6 crore PAT during the quarter was at Rs 495.1 crore, above our estimate of Rs 388.9 crore on account of higher other income, which was at Rs 967.2 crore, above our estimate of Rs 633.6 crore.
We continue to remain cautious on BPCL given the volatility in oil prices and upcoming elections resulting in uncertainty over future earnings. We believe the company will continue to trade at lower valuation multiples considering the above risk factors. We have a HOLD recommendation on the stock with a target price of Rs 320 (based on average of P/BV multiple: Rs 329/share and P/E multiple: Rs 312/share).
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First Published on Feb 19, 2019 03:48 pm