Target: ₹240
CMP: ₹261
We met with the management of Bharat Petroleum Corporation Ltd (BPCL) recently, and it: highlighted the proportion of Russian crude in the refining mix is likely to dip to about 24 per cent in Mar’25 (from 35-40 per cent), remains hopeful of positive news from Mozambique in near future, with gas supply starting in FY29 and aims for an FY28 CGD EBITDA target of ₹4,000 crore .
While only ₹6,100 crore has been approved currently for the Andhra Pradesh refinery project, there is a possibility of another ₹95,000 crore capex being incurred. The ₹49,000 crore Bina refinery expansion is also underway with the majority of the spending scheduled for FY26/FY27.
BPCL’s current 1-year forward valuation of 1.3x P/B at par with the mean -1 SD (standard deviation). It now trades on par with HPCL (on a 1- year forward P/B basis) vs. a historical premium of 50 per cent.
While valuation appears reasonable and strong marketing performance continues, a muted mid-term refining outlook (our FY26E/FY27E PAT are 17/18 per cent sensitive to every $1/bbl change in GRM) and commencement of new capex cycle emerge as key concerns. Hence, we reiterate our Neutral rating with an SoTP-based valuation of ₹240/share.