Jefferies Downgrades BPCL to Underperform, Cuts Target Price to Rs 310

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nvestment bank Jefferies downgraded Bharat Petroleum Corporation Limited (BPCL) to Underperform on September 20, citing increased marketing losses in diesel. The brokerage firm set a target price of Rs 310 per share, down from its previous target of Rs 425.

Jefferies expects BPCL to incur an Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) loss in the second half of FY24 due to the increased marketing losses. The brokerage firm has cut BPCL’s EBITDA margin by 22 percent for FY24.

Jefferies’ report comes at a time when oil marketing companies (OMCs) are facing significant losses on diesel. The brokerage firm estimates that OMCs are currently losing approximately Rs 9 per litre on diesel, which could lead to a combined loss of around Rs 450 billion in the second half of FY24.

Jefferies expects Indian Oil Corporation Limited (IOC) to be the least affected among OMCs due to its favourable refining-to-marketing ratio.

BPCL shares have gained 5.3 percent since January 1 and 9.21 percent in the last one year. However, the stock closed 2.07 percent down at Rs 352.9 on September 20 following the Jefferies downgrade.


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