BPCL Weightage in MSCI may Jump as FII Cap Set to go Up
Co likely to see foreign funds buying shares of around .₹ 1,008 crore
Mumbai: Investors are mounting bets on state-owned BPCL 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 .₹ 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 .₹ 1,008 crore at Tuesday’s closing price. Shares of BPCL have surged ne- arly 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 .₹ 942 zone, which is crucial spinning top seen in the December and January series at same levels,” said Navneet Daga, head of derivatives, IIFL.
BPCL, which closed at .₹ 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 Services.
For the nine month ended December 2015, company reported an 11.9% jump in earnings per share to .₹ 67.5. Analysts are forecasting an EPS of .₹ 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.