Bpcl, Hpcl Sale May Net Over Rs 30,000 Crore

The government may net over Rs 30,000 crore from the strategic sales of Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL). The divestment ministry is likely to present the figures at the meeting of the Cabinet Committee on Disinvestment scheduled for September 7.

The ministry is likely to suggest offloading 36.7 per cent in BPCL and 26 per cent in HPCL to a private strategic partner. The ministry of petroleum plans to suggest an initial public offer prior to the strategic sale in order to fund its expansion projects for the two companies.

Based on a price of over Rs 1,775 per share for BPCL and Rs 1,500 in HPCL, the realisation for the government comes to over Rs 19,500 crore in BPCL and nearly Rs 13,000 crore in HPCL, according to merchant bankers whose figures will be quoted by the disinvestment ministry to bolster its case for a strategic sale. Accordingly, the enterprise value for BPCL and HPCL will be over Rs 50,000 crore each.

The BPCL scrip closed at Rs 263.35 at the Bombay Stock Exchange today, while HPCL ended the day at Rs 268.15.

The market capitalisation of the two companies stood at Rs 7,900 crore and Rs 9,090 crore, respectively. The BPCL scrip has seen a high of Rs 351 and a low of Rs 120 in the past year, while the HPCL scrip has swung between Rs 339 and Rs 95.

The merchant bankers said their calculations were based on the earnings per share of Rs 28.33 and Rs 23.26 in BPCL and HPCL and an expected price-earnings ratio of over 60. IBP, sold to Indian Oil Corporation, fetched a price-earnings ratio of 63, and was used as the benchmark for the calculation, they said.