In Q2FY22, Bharat Petroleum Corporation (BPCL) sales grew by 62.6% YoY and 15% QoQ to Rs 815 billion. Standalone EBITDA increased by 16.3% YoY and 37.7% QoQ to Rs 44.8 billion. Net profit expanded by 19.9% YoY and 79.4% QoQ to Rs 26.9 billion, mainly supported by increase in other come which grew by 3017% YoY to Rs 3.9 billion. Its domestic marketing volume grew by 11% while Refinery utilization remained at 104% in Q2FY22.

Commenting on the result review, IDBI Capital Equity Research said, "We are revising our PAT estimates upwards by 18.9% and 14.7% for FY22 and FY23 respectively.  The stock is currently quoting at PER of 8.9xFY24E and 6.5xFY24 EV/EBITDA. We resume the coverage on the Company with Hold rating and SOTP based target price of Rs 464."

Key highlights and investment rationale

Healthy Quarter: In Q2FY22, BPCL reported healthy sales and PAT growth of 62.6% and 19.3% YoY. The Refinery utilization of the Company was healthy at 104%. At the same time, domestic marketing volume grew by 11%. The Company reported GRM of USD 6.04/bbl during Q2FY22.

Outlook: As per the Management, the disinvestment process is in advanced stage and GOI aiming it to complete it by Q4FY22. Meetings with the prospective bidders have not taken place yet and may likely to take place in Q3FY22. The Company plans to incur Rs100 billion capex in FY22.

Valuations and recommendations: The stock is currently quoting at PER of 8.9xFY24E and 6.5xFY24 EV/EBITDA. We resume the coverage on the Company with Hold rating and SOTP based target price of Rs 464.

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