BPCL share price falls 4% after company declares 2nd interim dividend; should you buy, sell or hold?

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March 17, 2021 11:47 AM

BPCL share price fell as much as 4 per cent to Rs 435.65 apiece on BSE on Wednesday, a day after the company declared the second interim dividend of Rs 5 per share of face value Rs 10, each for the current fiscal.

BPCL, BPCL share priceCredit Suisse in its latest research report has upgraded BPCL stock to 'outperform' from 'neutral' earlier. Image: Reuters

BPCL share price fell as much as 4 per cent to Rs 435.65 apiece on BSE on Wednesday, a day after the company declared the second interim dividend of Rs 5 per share of face value Rs 10, each for the current fiscal. The dividend announced is much lower than expected. Moreover, the board of directors of Bharat Petroleum Corporation Ltd have fixed March 27, 2021, as the record date to determine the eligibility of the shareholders to receive the declared interim dividend. “Interim dividend will be paid or the warrants in respect thereof would be posted on or before 12th April, 2021,” company said in a BSE filing.

BPCL paid only Rs 5 per share dividend which is much lower than expected of Rs 30 per share based on the cash received from sale of treasury shares, says Yogesh Patil, Senior Research Analyst at Reliance Securities. However, for the long-term, Patil has maintained his positive view on the stock. “Government is still discovering value in BPCL through bids as financial bids are not finalized yet. We believe the government is likely to sell a 53 per cent stake at a higher valuation,” Yogesh Patil told Financial Express Online.

Credit Suisse in its latest research report has upgraded BPCL stock to ‘outperform’ from ‘neutral’ earlier. It has raised the price target to Rs 585 apiece from Rs 375, earlier, which is a hike of 2.5 per cent. Anubhav Aggarwal, Krati Sankhlecha and Sayantan Maji, research analysts at Credit Suisse, said that steady-state EBITDA for BPCL could be US$2 bn-2.5 bn. “The stock has upside even beyond divestment of the government’s stake. The stock should re-rate as BPCL gains market share from IOCL and HPCL and non-fuel revenues typically command higher multiples,” they added.

So far in intraday, a total of 3.18 shares have traded on BSE, while 1.30 crore scrips have exchanged hands on the National Stock Exchange (NSE). Refineries are now in the midst of one of the most extreme downturns, with a second round of the pandemic delaying growth, and the near-term forecast is bleak, says Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited. Technically the stock has a strong support zone around Rs 400. “We recommend a hold at this level, and investors are recommended to add in the zone of Rs 400-390,” Biswas told Financial Express Online. Further, he advised investors to maintain Rs 368 as a stop loss. “We are expecting BPCL to bounce back from the support zone of Rs 390-400 and a bounce that could lead the price to Rs 488 in the next 6 to 9 months’ time horizon,” he added.

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