On Tuesday, CLSA maintained its Underperform rating on Bharat Petroleum Corp. (BPCL:IN) stock with a constant price target of INR270.00. The firm's analysis highlighted Bharat Petroleum's second-quarter financial performance for the fiscal year 2025, which fell short of expectations due to significant refining margin deficits. The company's profitability was further impacted by losses in its marketing segment, particularly in liquefied petroleum gas (LPG).
The management of Bharat Petroleum attributed the disappointing refining results to operational shutdowns at the Bina and Kochi refinery units, as well as a reduced proportion of Russian crude oil in its processing mix. Despite these challenges, CLSA has increased its earnings per share (EPS) forecast for BPCL by 12% for the fiscal year 2025, citing expectations for improved marketing margins and a moderate recovery in gross refining margins (GRMs).
CLSA's analysis indicates that potential risks to Bharat Petroleum's stock could arise from increases in excise duty or reductions in retail fuel prices. Additionally, the firm noted that the absence of a clear recovery in GRMs would serve as negative catalysts for the company's financial outlook.
The price target set by CLSA reflects the firm's assessment of Bharat Petroleum's value, taking into account the current challenges and anticipated improvements in the company's financials. The unchanged target of INR270.00 suggests that CLSA does not foresee a significant change in the company's market valuation in the near term, despite the revised EPS forecast.
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