ONGC nears 52-week high; stock up 7% in two days post HPCL deal

The stock was up 4% to Rs 208, extending its Monday's 3% gain on BSE, trading close to its 52-week high of Rs 212 touched on January 31, 2017 in intra-day trade.

Oil and Natural Gas Corporation (ONGC) was up 4% to Rs 208, extending its Monday’s 3% gain on BSE, after the company said it will acquire the 51.1% government stake in Hindustan Petroleum Corporation (HPCL) at a cost of Rs 369.15 billion.

The stock is trading close to its 52-week high of Rs 212 touched on January 31, 2017 in intra-day trade. The counter has seen more than doubled trading volumes with a combined 17.24 million shares changed hands on BSE and NSE till 02:40 PM.

“Key benefits of having an integrated oil conglomerate are performance of integrated oil companies balance upstream and downstream pressure and provide for stability despite volatility in crude prices, lower earnings volatility, diversified cash flows and lower business risk resulting in higher PE multiples and valuations resulting in higher shareholder value and several synergies are available through HPCL (complimentary asset portfolio, midstream and downstream presence and access to marketing network),” ONGC said in a statement.

The deal is expected to be completed by the end of this month.

According to PTI report, ONGC has got approval from the government for selling its stake in Indian Oil Corporation (IOC) and GAIL to help fund the Rs 369.15 billion acquisition of HPCL.

ONGC holds 13.77% stake in nation's biggest refiner IOC, which at today's trading price is worth over Rs 262 billion. It also holds 4.86% stake in gas utility GAIL India Ltd, which is worth over Rs 38.47 billion, added report.