BPCL shares hit record high, extend gain for 3rd straight day as analysts see up to 36% upside

Shares of the oil marketing company Bharat Petroleum Corporation Ltd rose more than 5% on Friday, February 16, to hit a year-high level after analysts upgraded the stock to ‘buy’ rating, projecting up to 36% upside from the current levels.

Other oil marketing PSUs Indian Oil Corporation and Hindustan Petroleum Corporation Ltd (HPCL) also gained up to 3% as analysts raised the target prices.

In a report, brokerage Jefferies upgraded BPCL to ‘buy’ from ‘underperform’ earlier and raised the target price to ₹890 per share from ₹415 per share. The new target price reflects a potential upside of 36% from the current trading levels.

Jefferies mentioned that BPCL offers the largest margin of safety among oil marketing companies.

While assigning a ‘hold’ rating on Indian Oil Corporation (IOC), the brokerage raised the target price to ₹215 per share against ₹135 per share earlier. The target price implies a potential upside of 13% from Thursday’s close.

The brokerage assigned an ‘underperform’ rating on HPCL but raised the target price from ₹330 per share to ₹550 per share, implying a potential downside of 4% from Thursday’s close.

However, Jefferies also listed key risks to share performance of OMCs. The rise in crude oil prices and the narrowing of discounts on Russian crude are the major risks to OMCs.

Any Intervention in retail pricing, increase in excise duties on auto fuels and large capital expenditure commitments in new energy are also among key risks to OMCs, Jefferies noted.

Rising for a third straight day, BPCL shares hit a fresh record high of ₹687.65 per share on BSE on Friday. The stock hit a 52-week high on Thursday as well after 17 entities purchased shares worth ₹399 crore of the oil marketer in block deals.

BPCL shares were trading 2.85% higher at ₹671.05 per share on BSE at 9.48 AM. HPCL shares were up 0.67% at ₹578.80 apiece while IOC shares traded 0.74% higher at ₹191.30 per piece.