Jefferies predicts 22% upside for this oil marketing company – 3 reasons why

Jefferies predicts 22% upside for this oil marketing company – 3 reasons why

The global brokerageJefferieshas given a ‘Buy’ rating toBharat Petroleum. It has set a target price of Rs 435. This indicates nearly 22% upside from the current market level. According to the brokerage report, the company may benefit from stable crude oil prices, strong refining margins and improved earnings visibility over the next year.

Let’s look at why Jefferies believes the stock could move higher –

Jefferies pointed out that the company’s earnings outlook has stayed firm largely because crude oil prices have remained stable. According to the brokerage report, “BPCL earningsoutlook remains strong with crude below US$ 70/bbl and oversupply in the market.”

Key Highlights

The report highlighted that global supplies have been rising faster than demand. TheOrganization of the Petroleum Exporting Countries and its allies (OPEC+)increased output steadily through most of 2025. At the same time, forecasts from the International Energy Agency (IEA) suggest demand will rise at a slower pace.

This environment has supported refining profitability. Jefferies noted that “Refining margins have surged 51% y/y in YTDFY26,” which is significantly higher than usual. These margins, known as Singapore Gross Refining Margins (GRM), contribute nearly half of the company’s operating profit.

The brokerage believes the company is well-placed to benefit from this because it has consistently earned better refining premiums than its peers since financial year 2023.

Key Highlights

Jefferies also highlighted the unusual strength in marketing margins, that is, the difference between the selling price of fuel and the cost of crude oil. These margins play a key role in the earnings of oil marketing companies, especially for products such as petrol and diesel.

According to the report, “Marketing margins on diesel/petrol at Rs 5.7/9.6 per ltr in YTDFY26 are tracking significantly ahead of normative levels.”

Another point flagged in the report is that the company may be less affected by crude oil volatility compared to competitors. As noted in the report, “In a crude upside scenario, BPCL earnings would be less affected vs HPCL which is more skewed towards marketing in its portfolio.”

Key Highlights

One major relief comes from the government’s decision to compensate oil marketing companies for their past losses on liquefied petroleum gas (LPG). These losses accumulated over several quarters when retail prices were kept lower than international rates.

Jefferies pointed that “the company has a total LPG loss of Rs 137 billion as of Sep-25.” To cover this, the government has announced a Rs 300 billion compensation plan, which will be paid over 12 months. The brokerage highlights that the company’s share of this is substantial, adding, “BPCL’s shareat Rs 76 billion (25% of total). This is set to boost its earnings during 2HFY26-27.”

Jefferies also noted that the stock has corrected around 6% in the past month. According to the brokerage, the stock is currently trading at 1.5 times forward price-to-book value, compared to a long-term average of 1.8 times. The report mentioned that this valuation discount makes the stock relatively appealing in comparison to its long-term trend.

Key Highlights

The brokerage says the stock’s “current disc to Nifty of 51% on fwd P/B compares favorably with LT avg of 31%.” Based on this, Jefferies has reiterated its buy call with a price target of Rs 435, using a valuation of 1.6 times December 2026 forward price-to-book.

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