Shares of Bharat Petroleum Corporation Limited (BPCL) were rising on Tuesday after global brokerage firm Citi expressed optimism over the oil firm's future outlook.

What Happened: Citi maintained its “buy” recommendation on the stock with a target price of ₹380. The brokerage said that oil marketing companies (OMCs) are currently in a positive phase as headwinds reverse direction. 

Three OMCs have outperformed the broader market on a year-to-date basis by 17%-37% but have underperform by 9% to 21% over the last six months, with most of it concentrated in the beginning of 2024, the research firm said.

The reasons for their underperformance range from soft gross refining margins (GRM), weak marketing margins post a fuel price cut and a subdued first-quarter performance. However, Citi said that these factors are now reversing course.

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The public sector firm also plans to invest ₹ 1.70 lakh crore over the next five years under "Project Aspire" to expand its core oil refining and fuel marketing operations, as well as invest in petrochemicals and green energy, the company said in its annual report.

Project Aspire is a five-year strategic framework based on two fundamental pillars dedicated to growing the firm’s core businesses, which include refining, marketing of petroleum products and upstream, and at the same time focusing on big bets, comprising petrochemicals, gas, green energy, non-fuel retail and digital. 

BPCL is advancing petrochemical projects at two of its three oil refineries. At the Bina refinery in Madhya Pradesh, a ₹49,000 crore ethylene cracker project is underway, which will also increase the oil refining capacity from 7.8 million tonnes to 11 million tonnes per year by 2029.

Additionally, a polypropylene project is being established at the Kochi refinery in Kerala, set to be completed by 2027.

Price Action: Shares of BPCL were trading 1.88% higher at ₹350.25 during mid-day trading on Tuesday.

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