BPCL shares: Nirmal Bang bullish on state-run firm; sees 35% upside
On Thursday, shares of Bharat Petroleum Corporation Ltd (BPCL) slipped 1.50 per cent or Rs 4.85, to close at Rs 317.95 on BSE.
- Aug 15, 2025,
- Updated Aug 15, 2025 10:53 AM IST
Nirmal Bang Institutional Equities has upgraded shares of Bharat Petroleum Corporation Ltd (BPCL) to ‘BUY’ with a target price of Rs 431, implying a 35.6 per cent upside from the current market price of Rs 318.
The brokerage said the call is “based on healthy retail margins under our declining oil price forecast over the next 1–2 years, likely revival in GRMs and potential growth from CGD ramp-up,” adding that “1QFY26 CGD sales” stood at 338 TMT on an aggregate capex of Rs 7,900 crore versus 150 TMT in FY25.
“We have raised the target price by 11.8 per cent to Rs 431, but after cutting target P/E by 7.4 per cent to 8.8x in line with FY20–24 average vs 5-year median P/E of 6.9x,” it said.
Nirmal Bang said the lower target P/E follows a “material increase in estimates” — FY26E by 50.8 per cent on “cut in LPG losses and higher PAT from JVs which surged 2x in 1QFY26, and FY27E by 111.7 per cent on “higher JV PAT, and increase in retail margin from Rs 3.75/ltr to Rs 4/ltr’.”
It added that further re-rating is possible with “visibility in earnings from the ramp up in CGD,” which could offset capacity overhang from the Bina petrochem project and interim ROCE pressure as capex “peaks at Rs 35,000 crore each in FY28E/FY29E vs Rs 25000 crore each in FY27E/FY28E.”
On near-term drivers, Nirmal Bang highlighted four catalysts: (i) Healthy retail margin. (ii) Future upside in earnings/cashflows from the ramp up in its 26 standalone CGD projects likely from FY28E, BPCL has CGD capex plan of Rs 10,000 crore to support growth in CNG stations from 840 to more than 1,100 over FY25–FY28E. (iii) New plans in LNG retailing (2 ROs started, another 10 planned) and 26 biogas projects. (iv) Potential closures in global refining capacity – implies revival in GRMs.
On Q1 performance, Nirmal Bang said, “BPCL’s 1QFY26 standalone PAT miss Bloomberg (street) estimates by 8.3 per cent but beats NBIE estimates by 48.3 per cent – due to 114 per cent beat on Marketing EBITDA, which offset the 50 per cent miss on Refining EBITDA.”
It added that the reported GRM was a “36.7 per cent miss vs NBIE estimates due to higher inventory cost – not disclosed,” while standalone revenue was a 19.3 per cent/7.9 per cent beat vs NBIE/street estimates.
At the operating level, “EBITDA margin saw 76bps beat, while EBITDA at Rs 9,663 crore was a 30.8 per cent beat vs NBIE estimate/6.3 per cent miss vs street estimate,” it said.
On Thursday, shares of Bharat Petroleum Corporation Ltd (BPCL) slipped 1.50 per cent or Rs 4.85, to close at Rs 317.95 on BSE. The stock has rallied 26 per cent in the past six months and surged 35 per cent from its 52-week low of Rs 234.15.
Nirmal Bang Institutional Equities has upgraded shares of Bharat Petroleum Corporation Ltd (BPCL) to ‘BUY’ with a target price of Rs 431, implying a 35.6 per cent upside from the current market price of Rs 318.
The brokerage said the call is “based on healthy retail margins under our declining oil price forecast over the next 1–2 years, likely revival in GRMs and potential growth from CGD ramp-up,” adding that “1QFY26 CGD sales” stood at 338 TMT on an aggregate capex of Rs 7,900 crore versus 150 TMT in FY25.
“We have raised the target price by 11.8 per cent to Rs 431, but after cutting target P/E by 7.4 per cent to 8.8x in line with FY20–24 average vs 5-year median P/E of 6.9x,” it said.
Nirmal Bang said the lower target P/E follows a “material increase in estimates” — FY26E by 50.8 per cent on “cut in LPG losses and higher PAT from JVs which surged 2x in 1QFY26, and FY27E by 111.7 per cent on “higher JV PAT, and increase in retail margin from Rs 3.75/ltr to Rs 4/ltr’.”
It added that further re-rating is possible with “visibility in earnings from the ramp up in CGD,” which could offset capacity overhang from the Bina petrochem project and interim ROCE pressure as capex “peaks at Rs 35,000 crore each in FY28E/FY29E vs Rs 25000 crore each in FY27E/FY28E.”
On near-term drivers, Nirmal Bang highlighted four catalysts: (i) Healthy retail margin. (ii) Future upside in earnings/cashflows from the ramp up in its 26 standalone CGD projects likely from FY28E, BPCL has CGD capex plan of Rs 10,000 crore to support growth in CNG stations from 840 to more than 1,100 over FY25–FY28E. (iii) New plans in LNG retailing (2 ROs started, another 10 planned) and 26 biogas projects. (iv) Potential closures in global refining capacity – implies revival in GRMs.
On Q1 performance, Nirmal Bang said, “BPCL’s 1QFY26 standalone PAT miss Bloomberg (street) estimates by 8.3 per cent but beats NBIE estimates by 48.3 per cent – due to 114 per cent beat on Marketing EBITDA, which offset the 50 per cent miss on Refining EBITDA.”
It added that the reported GRM was a “36.7 per cent miss vs NBIE estimates due to higher inventory cost – not disclosed,” while standalone revenue was a 19.3 per cent/7.9 per cent beat vs NBIE/street estimates.
At the operating level, “EBITDA margin saw 76bps beat, while EBITDA at Rs 9,663 crore was a 30.8 per cent beat vs NBIE estimate/6.3 per cent miss vs street estimate,” it said.
On Thursday, shares of Bharat Petroleum Corporation Ltd (BPCL) slipped 1.50 per cent or Rs 4.85, to close at Rs 317.95 on BSE. The stock has rallied 26 per cent in the past six months and surged 35 per cent from its 52-week low of Rs 234.15.