BPCL’s Privatisation Bid, GRM Key To Outlook: ICICI Securities  

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ICICI Securities Report

We resume our coverage on Bharat Petroleum Corporation Ltd. on a positive note and target price of Rs 544 per share (27% upside).

Our target price of Rs 544 assumes successful bid price in privatisation of Rs 609 per share (eight times FY22E enterprise value/Ebitda) on 56% of investors’ holding and Rs 462 per share (six times FY22E EV/Ebitda) on balance.

We estimate FY22E core gross refining margin recovering to $3.5/barrel of oil from $1.5/barrel of oil in nine months FY21, but net marketing margin fall to Rs 2.5/litre from Rs 3.07/litre in FY21E.

We expect global demand recovery and refinery closures to drive GRM recovery.

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