Emkay Global Financial is bullish on Bharat Petroleum Corporation has recommended buy rating on the stock with a target price of Rs 480 in its research report dated June 04, 2020.
Emkay Global Financial's report on Bharat Petroleum Corporation
BPCL reported Q4FY20 standalone EBITDA/net loss of Rs5.92bn/13.6bn. There was Rs10.8n of exceptional inventory loss as a result of Covid-19-led revaluation on the basis of replacement cost/NRV, whichever is lower. Forex loss was also high at Rs12.1bn. Reported GRM was USD0.75/bbl which had Rs25.7bn of inventory loss. Core GRM hence was USD6.5/bbl higher than our USD2.0/bbl est., driven by 122% refinery utilization, higher distillate yield and price lag impact. Marketing inventory loss stood at Rs12.6bn. Blended marketing margin rose 22% qoq to Rs6.1/kg, in line. Domestic/total sales volumes declined 5%/4% yoy with petrol/diesel down 0.5%/8%. Gross debt (incl. lease liabilities) rose 59% qoq/64% yoy to Rs478.2bn. Core EPS for Q4 stood strong at Rs13.8.
Outlook
We cut FY21/22E EPS by 31%/4% assuming Covid-19 impact on GRMs and volumes for FY21, coupled with higher below-the-line items. We cut TP by 16% to Rs480 (lowering investment value also) but retain Buy rating and EW stance on sector EAP.
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