Bharat Petroleum Corporation Limited (NSE:BPCL): Immense Growth Potential?
After Bharat Petroleum Corporation Limited’s (NSE:BPCL) earnings announcement in March 2018, analyst forecasts seem fairly subdued, as a 9.57% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 28.64%. Currently with trailing-twelve-month earnings of ₹90.09b, we can expect this to reach ₹98.71b by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Bharat Petroleum in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
See our latest analysis for Bharat Petroleum
How is Bharat Petroleum going to perform in the near future?
Over the next three years, it seems the consensus view of the 18 analysts covering BPCL is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2021, BPCL’s earnings should reach ₹85.12b, from current levels of ₹90.09b, resulting in an annual growth rate of 3.73%. This leads to an EPS of ₹48.85 in the final year of projections relative to the current EPS of ₹45.8. Growth in earnings appears to be a result of top-line expansion of 10.95%, dropping down to the bottome-line. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 3.82% to 2.55% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Bharat Petroleum, I’ve compiled three fundamental factors you should look at:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Bharat Petroleum worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Bharat Petroleum is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bharat Petroleum? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
