BPCL - GRMs beat estimates; E&P story intact... - ICICIdirect

Bharat Petroleum Corporation (BPCL) declared its quarterly results with revenues at Rs. 62368.7 crore and profit of Rs. 1647.6 crore. The results came above our estimates mainly due to higher gross refining margins (GRMs). Although the company reported profits in this quarter, it is still in the red having a loss of Rs. 2154.4 crore for 9MFY13. BPCL had a net over-recovery of Rs. 408.3 crore during Q3FY13. We expect gross under-recoveries at ~Rs. 1,30,206 crore and ~Rs. 98,797 crore in FY14E and FY15E, respectively (our assumption for the exchange rate is Rs. 54.5/dollar and Brent crude oil is $110/barrel).

We expect the net under-recovery of BPCL to be at Rs. 1526.2 crore and Rs. 1130.6 crore in FY14E and FY15E, respectively, while maintaining our assumption on the share of downstream companies to 5% of gross under-recovery.

We recommend the stock with a BUY rating and a target price of Rs. 461.

Source : Equity Bulls

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