ONGC's investment in HPCL turns profitable after six years

ONGC acquired the government's 51% stake in HPCL on January 31, 2018, for ₹36,912 crore. It had acquired the stake at ₹473.97 per share.

On January 31, 2018, shares of HPCL had closed at ₹397.12. It had last touched the price of ₹473 in September 2017.

Tuesday's surge means that HPCL's shares have finally crossed ONGC's buy price. As of Tuesday's high, ONGC's 54.9% stake in HPCL is valued at ₹37,088 crore.

Shares of ONGC had risen 8% on Monday and are nearing their record high of ₹314.67, which it had last hit in 2014. The stock is up 27% in January, which is its best month on record since May 2009.

HPCL's shares surged from mid-November when it announced September quarter results and the company said it was expanding refinery capacity by 7 MTPA at Vizag and 9 MTPA to commission the Barmer refinery. The refinery in Mumbai has already expanded its capacity to 9.5 MTPA from 7.5 MTPA. HPCL also commissioned a 5 MT regasification and storage terminal at Chhara.

The company also plans on investing ₹75,000 crore over the next five years, of which 25-30% will be spent on the renewables business, 20-25% on refining and the balance on marketing.

Shares rose 40% in November, and 15% in December and are up another 20% this month.

Shares of HPCL are currently trading 5.7% higher at ₹478, while those of ONGC are up another 3.6% to ₹261.65.