BP PLC              

BP PLC (LON: BP.) is an FTSE 100-listed multinational oil and gas company with major operations in North and South America, Europe, Asia, Australasia, and Africa.

For the Q4 FY21, BP. declared a dividend of US 5.46 cents per ordinary share, payable on 25 March 2022. The ex-dividend date will be 17 February 2022.

Investment Rationale – Watch at GBX 385.30

• Rosneft Exit: On 27 February 2022, BP decided to exit its 19.75% shareholding in Rosneft. It implies BP will no longer report reserves, production, or profit for Rosneft. However, the Company’s financial frame and distribution guidance remained unchanged.
• Financial Growth: During FY21, BP showed growth in profitability and reduction in net debt against FY20.
• Expected Flat Margins: Due to persistent geopolitical uncertainties, the Company expects flat profits in Q1 FY22 compared to Q4 FY21.
• Weaker Margins: As of 31 December 2021, the gross (13.6%), EBITDA (9.4%), and net margin (5.1%) of the Company were lower than the respective industry median.
• Overvalued Multiples: On a forward 12-month basis –EV/EBITDA, Price / Cash Flow, and Price/Earnings valuation multiples of BP. are overvalued against the average of the energy sector.
• Bearish Technical Indicators: The 14-day RSI (50.97) is hovering in the neutral range and suggesting an indecisive action, while the current market price is approaching the middle Bollinger Band.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the expected flat margins, overvalued multiples, weak margins, and bearish technical indicators, we have given a “WATCH” recommendation on BP PLC at the current market price of GBX 385.30 (as of 03 March 2022 at 08:18 AM GMT).

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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