Bharat Petroleum: Buy Rated on Structural Margin Strength, Disciplined Growth Capex and Undemanding Valuation

Morgan Stanley analyst Mayank Maheshwari maintained a Buy rating on Bharat Petroleum Corporation Limited today and set a price target of INR468.00.

Mayank Maheshwari has given his Buy rating due to a combination of factors that, in his view, create an attractive risk‑reward profile for Bharat Petroleum Corporation Limited. He expects domestic fuel demand to continue strengthening, while global refining margins stay structurally above historical mid‑cycle levels, supported by ample crude supply, constrained refining capacity worldwide, and high utilization rates. On this backdrop, he projects BPCL’s core integrated margins to remain robust at around US$12 or more per barrel with Brent in the US$60–65 range, which underpins meaningful earnings potential. He further notes that BPCL’s sizable US$8 billion capex program, directed toward downstream petrochemical integration, gas infrastructure, and new energy initiatives, is planned in line with internal cash generation, helping keep leverage at a conservative level below 0.5x net gearing.
In addition, Maheshwari highlights that current valuations appear undemanding relative to the company’s own long‑term history. On his estimates, the stock trades at about 1.4x 12‑month forward price‑to‑book and 6x 12‑month forward EV/EBITDA, which translate into roughly 10% and 22% discounts versus 20‑year averages for these multiples. He believes these discounts do not fully reflect the resilience of BPCL’s integrated margins or the positive impact of its shifting asset mix toward higher‑value and future‑oriented businesses. Taken together, the supportive industry environment, solid balance sheet, disciplined investment strategy, and discounted valuation lead him to conclude that the share price is likely to rise in absolute terms over the near term, justifying his Buy recommendation.