BPCL - E&P @ Significant discount, Reiterate Buy - Emkay

Reco: BUY
CMP: Rs 315
Target Price: Rs 397

- Risk reward ratio entering a favorable quadrant for BPCL

- We see high probability of positive news flows emerging from further drilling by Anadarko in the Mozambique block

- Valuation: We value BPCL on an SOTP basis at Rs.397/sh. E&P assets at Rs 100/sh which accounts for 25% of the value and other investments contribute 21.6% or Rs 86/sh. BPCL's core refining and marketing business is valued at ~Rs 211/sh on 1x FY14E BV. At CMP stock trades at 1.2x FY14 P/BV and post the correction CMP provides attractive level to enter in the stock with favorable risk reward. Hence we change our recommendation from Accumulate to BUY with TP of Rs.397.

Source : Equity Bulls

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