Nuvama Institutional Equities has maintained its ‘Reduce’ rating on Bharat Petroleum Corporation. The brokerage has a target price of Rs 301 on the stock, implying a downside of 5.3% from the current market price.
Nuvma on BPCL: Weak refining margins
BPCL’s peak earnings are behind due to a weak refining margin environment in the near term and LPG under-recoveries, said Nuvama. Moreover, a high capex cycle in extremely long gestation projects also weighs on return ratios, rendering risk-reward unfavourable.
The company’s Gross Refining Margin (GRM) in Q1 fell 38% YoY to $4.9/ barrel on a rise in inventories due to geopolitical concerns. The share of Russian crude decreased in July 2025 due to sanctions.
BPCL’s Q1FY26 EBITDA came in at Rs 9,700 crore, a jump of 71% YoY and 24% QoQ, led by strong marketing segment earnings, partly offset by weak refining margins and LPG under-recoveries.
Nuvma on BPCL: Weak LPG under-recoveries
However, LPG under-recoveries rose to Rs 12,500 crore, but more clarity awaited on LPG compensation of Rs 30,000 crore for OMCs. But again, the share of each company and the timelines for payout remain unclear.
Nuvma on BPCL: Market share declined
Also, BPCL’s market share gain in Q1 against HPCL fell as BPCL’s direct sales volumes of diesel (HSD) and petrol (MS) fell because many bulk buyers shifted purchases to private players who were giving cheaper rates.
Nonetheless, BPCL’s massive capex guidance of Rs 20,000 crore over FY26, Rs 25,000 crore over FY27, and Rs 35,000 crore over FY28 may lift debt, risk from extremely long-gestation projects, and reduce RoCE.
BPCL’s share performance
The share price of BPCL has fallen 2% in the last five trading sessions. The stock price of the Indian oil and gas major has declined by 8.3% in the last one month. However, the stock has given a return of more than 24% in the last six months. BPCL’s share price has erased 8.4% of investors’ wealth in the past one year.