Accumulate Bharat Petroleum Corporation; target of Rs 305: Prabhudas Lilladher

Moneycontrol • 5 days ago

Original source

Key Investment Pillars

  • BPCL reported a net SAED GRM of USD14.0/bbl, down QoQ from USD17.0/bbl, due to higher crude freight costs and the absence of discounts on Russian crude in Q2FY27.
  • Implied GMM improved sequentially from a loss of INR-5.4/ltr to a profit of INR5.5/ltr, as crude oil prices remained soft during July-Aug'26 before surging above USD100/bbl in Sep'26.
  • Management indicated planned refinery maintenance shutdowns in Q3/Q4FY27, which may temporarily moderate utilisation from ~118%.
  • FY27 capex target stands at INR250bn, with INR130bn spent in H1FY27.

Thesis Validation Checklist

To validate the thesis, investors should watch for: recovery in marketing margins, moderate GRM, and the company's ability to maintain its refining utilization rates despite planned maintenance shutdowns. Additionally, investors should monitor the progress of BPCL's major projects, such as the Bina Petchem project and the proposed Andhra Pradesh refinery, as well as the company's efforts to diversify its crude sourcing and reduce its dependence on Russian crude.