BPCL drops 6% on report that government may revise privatization plan
Shares of Bharat Petroleum Corporation Limited (BPCL) fell 6% to Rs 370.50 on BSE during Monday’s intraday trading on reports that the government may review the company’s privatization plan, including the revision of the conditions of sale. The transition to green and renewable fuels has made privatization difficult in current terms, according to a PTI report citing government officials.
The government, which currently holds a 52.98% stake in the oil marketing company, plans to sell its entire stake for which three expressions of interest (EOI), including one from the Vedanta group led by billionaire Anil Agarwal, have been received.
The government was to seek financial offers once bidders complete their due diligence and the terms and conditions of the share purchase agreement are finalized, PTI reported. CLICK HERE FOR THE FULL REPORT
That said, in an interview with Money controlAnil Agarwal, chairman of Vedanta Resources, said the government had decided not to go ahead with the plan to privatize state-owned company BPCL and told its suitors that it would revise the plan and come to the market.
Meanwhile, over the past month, BPCL’s stock has outperformed the market by gaining 3%, against a 1% decline in the S&P BSE Sensex. However, over the past six months, it has fallen 14%, compared to a 7% decline recorded by the benchmark.
HDFC Securities analysts have a ‘BUY’ rating on BPCL, with a target price of Rs 420, given that it has corrected around 30% from its peak in the past six months, due to pressure on margins commercialization of automotive fuels and an increase in LPG under-recoveries.
“We believe the recent correction is overdone and see limited downside from current levels, driven by improving refining margins, the resumption of daily automotive fuel price changes and a gradual reduction in LPG under-recoveries. “, had said the brokerage firm in a March 21, 2022 report.