Investors are mounting bets on state-owned BPCLBSE 0.40 % after the company approved the increase in ceiling of investment for foreign institutional investors (FIIs) from 24% to 49%. This move, once approved by the shareholders and regulators, could result in FII inflow of over Rs 1,000 crore into the stock, according to analysts. Currently, BPCL has 0.41basis points weightage on the MSCI Emerging Market Index. After the ceiling on FII investment goes up to 49% from 24%, the weight of BPCL in MSCI index is expected to increase to 1.22%. This will result in foreign fund managers buying around 11 crore shares worth Rs 1,008 crore at Tuesday’s closing price.
Shares of BPCL have surged nearly 4.5% since April 1 and 15% in the past one month against gains of 1.4% and 3.3% by the Sensex in the respective periods. The stock has seen sharp long position build-up since beginning of April following its breakout above its 200-day moving average, a key sentiment indicator. “The stock continues to see an uptrend with long build-up to the tune of 11% in fresh open interest seen from the start of the April series. The stock has made strong gains with highs near the Rs 942 zone which is crucial spinning top seen in the December and January series at same levels,” said Navneet Daga, head of derivatives, IIFL.
PCL, which closed at Rs 925.45 on Wednesday, is one of the top picks of many brokerages. “Ongoing reforms have the potential to transform oil marketing companies into a structural investment play. BPCL stands out among OMCs for its superior RoE of 23% in FY15,” said Raamdeo Agrawal, Joint MD, Motilal Oswal Financial ServicesBSE 3.22 %. For the nine month ended December 2015, company reported an 11.9% jump in earnings per share to Rs 67.5. Analysts are forecasting an EPS of Rs 82 per share in 2015-16. “With multiple earnings catalysts, BPCL is a beneficiary of reforms/lower oil prices, which is likely to see margin expansion,” said Niel Gupte, analyst, JP Morgan in a recent note. “BPCL also offers value from an emerging E&P portfolio – justifying premium valuations.”
By : economictimes.indiatimes.com