Buy Bharat Petroleum Corporation; target of Rs 600: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Bharat Petroleum Corporation
In a significant decision, the Government has given cabinet approval to transfer government shareholding (53.29%) in BPCL, ex of the Numaligarh refinery (NRL), to a strategic investor. Transfer of management control is positive and will help the government optimize value; potential receipt ~Rs830bn, in our view. The transaction timelines remain tight and are expected to be closed by FY20 end. With ~25% fuel market share in India, BPCL will give a significant foothold in domestic market and we expect interest from range of suitors including global oil majors like Aramco, Rosneft, Shell etc.
We remain positive on OMCs given benign crude price environment and value BPCL at Rs600 (Rs537 earlier) based on 8x EV/EBIDTA FY22E.
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