BPCL turned on the gas in afternoon trades on Thursday its divestment should gather steam with the government shortly expected to appoint advisors for the process.
The imminent divestment saw the scrip of the state-run oil refiner climbing 1.90% to Rs 220.80. The scrip, however, came off the day's high of Rs 225. Volumes on the counter were high at 1.26 million shares.
The stock has been on a sustained rise over the last few sessions. From Rs 191.70 on 30 January 2003, it has surged 15.1% to the current Rs 220.80.
There are expectations that the government will soon invite bids to appoint advisors for its asset sale. Disinvestment minister Arun Shourie said in the Rajya Sabha on Wednesday that the divestment of BPCL and HPCL will be completed in 6-8 months.
Dealers say that the huge price differential in the scrips of BPCL and HPCL (about Rs 100 as HPCL currently trades at Rs 320) means that BPCL could fetch a good price from divestment, especially through the ADR issue.
Recent reports had it that the Centre will sell 20% of its equity in BPCL in the overseas market, while another 15% holding will be offloaded in the domestic market.
Last week, the inter-ministerial group on BPCL's privatisation favoured the offering of 6 crore shares, representing 20% equity base of BPCL, in the overseas market, most possibly in the US, through American Depository Receipts. Another 4.5 crore shares are likely to be sold to the public in domestic capital markets. The book building route will be followed in both the offers to arrive at the issue price.
The global advisor for BPCL, will finalise the modalities of the simultaneous offering of government stake in overseas and local markets.
The Centre intends to reduce its shareholding in BPCL from 66.2% to 26% by selling 35.2% stake to public (both domestic and overseas) and another 5% to company employees.
Currently, BPCL has about 4,500 retail outlets and a 20% share in the petroleum products market. As per recent reports, BPCL plans to double its refining capacity to 2,40,000 bpd from the current 1,30,000 bpd by October 2004, and modify its refineries so that it can process different grades of oil.
For the third quarter ended 31 December 2002, BPCL recorded a net profit of Rs 233 crore (Rs 2.33 billion), up by 224% over the Rs 71.90 crore it registered in the corresponding period of the previous year. Net sales increased by 29% to Rs 12,645.2 crore (Rs 126.45 billion) from Rs 9,801.1 crore (Rs 98.01 billion) in DQ 2001. The board of directors declared an interim dividend of 20% for the financial year 2002-03 (Rs 2 per share)
Recently, BPCL announced that it will invest Rs 7,500 crore (Rs 75 billion) in the next five years for floating joint ventures, modernisation, restructuring and brand building. The company plans to open 600 to 700 retail outlets by next year.
BSE code: 500547
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