Shares of Bharat Petroleum Corporation Ltd (BPCL) witnessed a notable surge of over 5% on Friday, February 16, reaching a yearly high. This upward movement followed analysts upgrading the stock to a ‘buy’ rating, with projections indicating a potential upside of up to 36% from the current levels.
In addition, other oil marketing Public Sector Undertakings (PSUs) such as Indian Oil Corporation and Hindustan Petroleum Corporation Ltd (HPCL) also experienced gains, climbing up to 3%. This positive movement came as analysts raised the target prices for these companies.
According to a report by brokerage Jefferies, BPCL was upgraded from ‘underperform’ to ‘buy,’ accompanied by an upward revision of the target price to ₹890 per share from ₹415 per share. This adjusted target price signifies a potential upside of 36% from the current trading levels.
Jefferies noted that among oil marketing companies, BPCL provides the most substantial margin of safety.
While maintaining a ‘hold’ rating for Indian Oil Corporation (IOC), the brokerage elevated the target price to ₹215 per share, up from the previous ₹135 per share. This adjusted target price indicates a potential upside of 13% from the closing price on Thursday.
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The brokerage issued an ‘underperform’ rating for HPCL but increased the target price from ₹330 per share to ₹550 per share. This adjusted target price suggests a potential downside of 4% from Thursday’s closing.
Nevertheless, Jefferies outlined key risks to the share performance of Oil Marketing Companies (OMCs). The escalation in crude oil prices and the reduction in discounts on Russian crude stand out as significant concerns for OMCs.
Jefferies also highlighted potential risks for OMCs, including any intervention in retail pricing, hikes in excise duties on auto fuels, and substantial capital expenditure commitments in the realm of new energy initiatives.
Continuing its upward trend for the third consecutive day, BPCL shares achieved a new record high of ₹687.65 per share on the BSE on Friday. The stock had already reached a 52-week high on Thursday, following block deals where 17 entities collectively purchased shares worth ₹399 crore from the oil marketer.
At 9:48 AM on the BSE, BPCL shares were trading 2.85% higher at ₹671.05 per share. Simultaneously, HPCL shares experienced a 0.67% increase, reaching ₹578.80 apiece, and IOC shares traded 0.74% higher at ₹191.30 per piece.