homemarket Newsstocks NewsBPCL shares jump 6% to hit 52 week high as board approves stake sale of Numaligarh refinery
BPCL shares jump 6% to hit 52-week high as board approves stake sale of Numaligarh refinery
The company will offload a 61.65 percent stake in the refinery for Rs 9,875 crore as a part of the privatisation process.
The share price of state-run Bharat Petroleum Corporation (BPCL) surged 6 percent to hit its 52-week high on Tuesday after the company's board approved the sale of its stake in the Numaligarh refinery. The company will offload a 61.65 percent stake in the refinery for Rs 9,875 crore as a part of the privatisation process.
The stock rose as much as 6 percent to its 52-week high of Rs 482.40 per share on the BSE.
Of that, a consortium of Oil India and Engineers India will acquire 49 percent of the stake and the rest 13.65 percent will be sold to the Assam government, the company said in a BSE filing. The state government currently holds a 12.35 percent stake in the refinery which will increase to 26 percent post the stake sale.
Meanwhile, Oil India holds 26 percent in the refinery, which operates a 3 million-tons-a-year oil refinery in Assam. The refinery is looking to expand its capacity threefold to 9 million tonnes a year to meet the growing fuel demand.
The brokerages also remained bullish on the stock post the board's approval of stake sale. JPMorgan is 'overweight' on the stock and raised its target price to Rs 550 per share from Rs 525 earlier.
The brokerage noted that the stake sale value was higher than expected and that the cash usage from this could likely be a one-time special dividend. The company can now move to critical due diligence.
Meanwhile, Jefferies noted that the proceeds could be used to pay for the equity stake purchase in Bharat Oman Refinery, as a one-time dividend of Rs 30 per share or it may even decide to retire the long-term debt and adding 4 percent to the annual profit before tax. The brokerage has a 'buy' call on the stock with a target at Rs 500 per share.
The central government will sell its entire 52.98 percent stake in BPCL, the biggest privatisation to date. The government had indicated that it expects to complete BPCL privatisation by the first half of FY22.
First Published: Mar 2, 2021 10:52 AM IST
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