ICICI Securities bullish on BPCL post Q4 results, record dividend announcement

Shares of Bharat Petroleum Corporation hit 52-week high of Rs 488 apiece after the company on Wednesday declared a record Rs 12,581 crore dividend. The government, which is selling its entire 52.98% stake in BPCL, will get Rs 6,665.76 crore plus dividend distribution tax. The dividend declared is in addition to the interim dividend of Rs 21 per share paid earlier in the fiscal.

In a regulatory filing, BPCL said its “Board of Directors has recommended a final dividend of Rs 58 per equity share (including a one-time special dividend of Rs 35 per equity share of Rs 10 each) for the financial year ended March 31, 2021 subject to the approval of the shareholders.” The dividend works out to Rs 12,581.66 crore, including a special dividend of Rs 7592.38 crore.

For the financial year ended March 31, the oil marketing major reported a record standalone net profit of Rs 19,041.67 crore on the back of the stake sale as well as a higher refining margin resulting from inventory gains accruing from rebounding oil prices. The profit compared with Rs 2,683.19 crore net profit in 2019-20, the filing showed.

In the January-March quarter, net profit rose to Rs 11,940.13 crore from Rs 2,777.62 crore a year back.

Analyst take
Brokerage ICICI Securities is bullish on BPCL with a price target of Rs 544. “BPCL is a play on privatisation and privatisation going through at a similar valuation as estimated by us is key to our positive stance. Among oil marketing companies (OMCs), we prefer BPCL as we are more confident of gains from privatisation than auto fuel marketing margin and GRM recovering to level of our estimates, which is more crucial to the stock performance of peers than of BPCL.”