BPCL - Favorable Risk-Reward: HDFC Securities

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HDFC Securities Institutional Equities

We are positive on Bharat Petroleum Corporation Ltd., given it has corrected ~30% from its peak over the last six months, owing to pressure on auto-fuel marketing margins and an increase in liquified natural gas under-recoveries.

We believe the recent correction is overdone, and see BPCL's limited downside from current levels, led by:

1. improvements in refining margins,

2. resumption of daily auto-fuel price changes, and

3. a gradual reduction in LPG under-recoveries.

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