Bharat Petroleum’s big dividend not the norm, warn experts

BCPL on Wednesday had announced a dividend of Rs 58, which was a 12 per cent yield on its then market price of  Rs 478.

Published: 28th May 2021 10:02 AM  |   Last Updated: 28th May 2021 10:02 AM   |  A+A-

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Express News Service

NEW DELHI: State-run oil marketing company Bharat Petroleum’s (BPCL) higher-than-expected dividend payout should not lure investors into accumulating PSU stocks in anticipation of receiving similar cuts from their profits. 

BCPL on Wednesday had announced a dividend of Rs 58, which was a 12 per cent yield on its then market price of  Rs 478. BPCL offered this cut on back of solid results for Q4FY21 in which it reported a profit after tax of Rs 11,940 crore as compared to a loss of Rs 1,847 crore in Q4FY20. The bottomline included a one-off component too since the company has sold its 61.5 per cent stake in Numaligarh Refinery for Rs 9,876 crore. 

“The dividend of Rs 58 per share announced by the BPCL must not be taken as a benchmark and investors may not expect such dividends from other PSUs because this dividend of Rs 58 per share is inclusive of one-time special  dividend of Rs 35 per share that would lead to an effective dividend of Rs 23 per share. This Rs 58 per share is in addition to the Rs 21 already disbursed as interim dividend,” said Vishal Blabhadruni, Banking Analyst at CapitalVia Global Research. He added, “(Since) this is a special one time dividend, investors would be better off not expecting such dividends from other PSUs... this was a special case, the Government of India being the biggest beneficiary.”

“We expect this dividend yield of 12.1 per cent to fall significantly in coming quarters. We suggest retail investors not to buy BPCL on expectation of getting this dividend of Rs 58 as after the expiry date of dividend the current market price of the share will fall by the almost same amount,” said Yash Gupta Equity Research Associate, Angel Broking. 

The share price of BPCL surged to a fresh 52-week high of Rs 488 apiece on the BSE on Thursday, rising 3.5 per cent intraday. However, it closed the day 0.49 per cent lower at Rs 469.90. Shares of two state-run oil marketing companies-HPCL and IOCL-also recorded a fall of 1.14 per cent and 1.47 per cent on Thursday. 

ICICI Securities in a note said that the second wave of Covid-19 and the subsequent restrictions would affect fuel demand in the current quarter, impacting the profitability of BPCL and other oil companies. “Improvement in gross refining margins (GRM) and further recovery in fuel demand will be important for BPCL’s profitability in the near term. The progress on divestment and response by potential bidders will be the key monitorable for the stock price performance,” the brokerage  pointed out. 


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