
Bharat Petroleum Corporation shares climbed over 2 percent to ₹316.40 in opening trade on Monday, supported by easing Brent crude prices and a fresh 'Buy' call from Nomura. The stock has shown strong momentum with a 25% upside potential as per Nomura's revised target price of ₹395 from ₹365. The positive performance comes after BPCL reported a consolidated net loss of ₹1,872.70 crore for Q1 FY27, compared with a net profit of ₹6,839.02 crore in the year-ago period, though revenue from operations rose 23% year-on-year to ₹1.59 lakh crore. Global crude oil prices retreated sharply with Brent crude falling more than 7% in early trade, briefly slipping below $90 a barrel after the US paused strikes against Iran, easing geopolitical tensions. Nomura noted that BPCL's standalone EBITDA loss of ₹41 billion was significantly better than its estimate of ₹158 billion loss and the consensus estimate of ₹137 billion loss, largely due to strong refining GRM of USD 41.4/bbl.
BPCL is in talks with the Centre regarding LPG compensation mechanisms, expecting monthly compensation of ₹633 crore till October 2026, according to the company's statement to NDTV Profit. The oil and gas company stated it was confident of government backing regarding LPG losses, due to the fact that the firm has been selling its domestic LPG, petrol, and diesel below market costs. BPCL's LPG compensation buffer was at ₹15,804 crore as of June 30, which includes an adjustment for ₹7,594 crore. The firm expects the government to continue its LPG compensation schemes, in line with past practices. The central government informed the Lok Sabha on July 23 that state-run oil marketing companies are still under pressure due to high crude oil prices and LPG under-recoveries amid continuous geopolitical concerns in West Asia. As of June 30, 2026, PSU OMCs' total under-recovery on domestic LPG was above ₹51,000 crore, with non-Ujjwala clients receiving an implied subsidy of more than ₹500 for each 14.2-kg LPG cylinder in July. Minister of State for Petroleum and Natural Gas Suresh Gopi confirmed that BPCL has incurred huge losses on the sale of petrol, diesel, and LPG due to the ongoing West Asia crisis.
For the quarter ending June 2026, Bharat Petroleum Corporation reported consolidated revenue of ₹151,277.03 crore, marking a significant increase of approximately 34.41 percent from ₹112,551.45 crore in June 2025. However, net profit for June 2026 stood at a loss of ₹2,273.83 crore, a decrease from a profit of ₹5,680.92 crore in June 2025. Diluted EPS for June 2026 was -4.38, compared to 16.01 in the same quarter of the previous year. The company attributed the loss to suppressed marketing margins on certain petroleum products, which were partly offset by higher refining margins. Nomura highlighted that BPCL being a refinery-focused oil marketing company benefits from strong refining cracks, which may offset a part of the losses in the fuel marketing segment (as seen in Q1 FY27 results). The brokerage expects the favourable refining environment to continue, citing large-scale damages to Russian refining capacities due to the ongoing war, decreasing China refinery run rates leading to export curbs of petroleum products, and 5% of global petroleum product flow from the Middle East currently being stuck at sea due to the blockade in the Strait of Hormuz.
Nomura highlighted BPCL's ambitious expansion strategy, noting the company is targeting 48mtpa of refining capacity by 2030E from 35.3mtpa currently across Mumbai, Kochi and Bina. The Bina refinery is currently undergoing a 3.2mtpa expansion, taking capacity to 11mtpa by September 2027E, while the Mumbai refinery will see upgradation to process more HS crude oil with high distillate output by July 2028. Additionally, BPCL is foraying into petrochemicals with two major projects at Bina and Kochi refineries, both likely to be commissioned toward the end of 2028. The brokerage expects BPCL to benefit from strong refining cracks, which may offset part of the losses in the fuel marketing segment, as seen in Q1 FY27 results. Nomura further noted that a far bigger expansion may come via a greenfield 9-12mtpa, $11 billion integrated refinery complex in Andhra Pradesh, which could provide additional capacity and cash flows for future deleveraging.
Nomura emphasized that BPCL possesses the healthiest balance sheet among OMCs with a net debt to equity of 0.3x, well suited for its ambitious expansion plans. The brokerage expects net debt to equity to peak around 1.5x if it decides to go ahead with its $11 billion greenfield complex, which is manageable given strong free cash flow generation. Commissioning of upstream projects - Mozambique LNG (first gas: FY29E), Brazil (first oil: FY31E, first gas: FY32E) - may provide additional cash flows to help deleverage faster. Despite positive long-term prospects, Nomura expects earnings pressure to continue in FY27 with a 96% year-on-year drop in EBITDA to ₹17 billion, incorporating retailing losses of ₹4.1/₹9.4 per litre for petrol/diesel and LPG under-recovery of ₹200/cylinder. At current valuation, BPCL trades at 5.6x and 1.2x FY28F EV/EBITDA and P/B respectively. The brokerage noted that BPCL has consistently reported strong GRM among OMC peers over the years given its relatively modern assets that allow higher crude flexibility and produce a higher proportion of high-value middle distillates.