Kotak Institutional Equities retains sell on BPCL, fair value at Rs 385

Kotak Institutional Equities has retained sell rating on Bharat Petroleum Corporation in the long term with a fair value of Rs 385. The stock ended up 3.3% at Rs 479.95 on Thursday while the BSE Sensex closed 396.22 points up at 38,989.74.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 76325.39 crore, up 2.63% from last quarter sales of Rs 74367.18 crore and up 6.30% from last year same quarter sales of Rs 71805.07 crore. The company has reported net profit after tax of Rs 1406.45 crore in the latest quarter.


Investment Rationale

The brokerage sees limited upside after the sharp outperformance against other OMCs which effectively prices in potential rerating of valuation multiple from strategic privatisation; any further upside will be contingent on improvement in earnings that may take time to percolate. A nonstrategic transaction like ONGC-HPCL may lead to de-rating of the stock, said KIE.