The board of Hindustan Petroleum Corp Ltd (HPCL) on Wednesday approved a Rs 2,500 crore share buyback plan as the company management feels the share price is lower than the value it deserves.
In a stock exchange filing, HPCL said it will buyback upto 10 crore shares for no more than Rs 250 apiece.
The company plans to buyback 6.56 per cent of the total shares. HPCL, a subsidiary of state-owned Oil and Natural Gas Corp (ONGC), has no immediate history of a share buyback.
Post buyback, ONGC shareholding in the firm will rise to 54.70 percent from the current 51.11 percent. Shareholding of public will fall to 45.30 percent from 48.89 percent, the firm said.
HPCL shares settled at Rs 186.75 apiece on BSE, up 0.54 per cent over previous close. The rate is about a third of Rs 473.97 per share that ONGC paid in January 2018 to acquire the government's 51.11 percent share in HPCL.
HPCL is the nation's third-biggest oil retailer after Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL). It owns two refineries a 7.5 million tonnes unit in Mumbai and another 8.3 million tonnes facility at Visakhapatnam in Andhra Pradesh. It also owns half of the 11.3 million tonnes Bathinda refinery in Punjab and is a 16.95 per cent owner of the 15 million tonnes a year Mangalore Refinery. It owns and operates 17,171 out of 71,843 petrol pumps in the country.
Sources said the share price of the company is much less than its 52-week high of Rs 322 and its market cap of Rs 28,457.39 crore is less than Rs 36,915 crore that ONGC paid for a 51.11 percent stake in 2018.
The firm, they said, controls a fifth of the world's fastest-growing fuel market but its share price isn't reflective of the value. And so the company management decided to go for a share buyback.
