Brokerages back BPCL, HPCL post Q1; good to go with?

A strong set of June quarterly numbers from oil retailers BPCL and HPCL is making brokerages take note, which have maintained their bullish bets on both.

Bharat Petroleum Corporation (BPCL) on Wednesday posted a three-fold jump in net profit for the three months to June at Rs 2,293 crore on the back of improved refining margins and increased sales.

It had clocked a net profit of Rs 745 crore in the same quarter of the last financial year. Total income during April-June also rose 23 per cent to Rs 82,979 crore.


SBICAP maintained ‘Buy’ on BPCL with a target price of Rs 526. “Q1 net profit was above estimates. It was purely driven by higher-than-expected inventory gains. Refining core performance was weak with lower core gross refining margins (GRM) and higher opex. Marketing inventory gain was higher than expected. Temporary pause in price hike doesn’t change structural deregulation story,” it said.

Japanese brokerage firm Nomura also maintained ‘Buy’ on BPCL with a target price of Rs 555. “Near-term focus will likely remain on retail prices of diesel and petrol. We continue to believe that OMCs should be able to pass on cost increases,” it stated.

Hindustan Petroleum Corporation (HPCL) reported an 86 per cent increase in first-quarter profit on account of strong refining margins. Net profit jumped to Rs 1,719 crore from Rs 925 crore earlier.

Nomura also maintained ‘Buy’ rating on HPCL with a target price of Rs 415.

Shares of BPCL and HPCL were up 0.70 per cent and 0.78 per cent, respectively, at Rs 390.35 and Rs 284.60 this morning.