Sibling rivalry: BPCL, IOC neck and neck in terms of market value

State-owned Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) are in a fight to bag the most-valuable oil-marketing company (OMC) tag. At Wednesday’s closing prices, BPCL’s market value at Rs 1.09 trillion was more than that of IOC (Rs 1.08 trillion). The feat is noteworthy considering BPCL’s market cap was less than half of IOC's about 15 months earlier. The privatisation buzz and tailwind provided by subdued oil prices have triggered a massive rally in BPCL. Its shares have nearly doubled from the October 2018 levels of Rs 265 to over Rs 500 last week. On the other hand, IOC’s has declined 5 per cent during the same period. Hindustan Petroleum Corporation (HPCL) — the smallest OMC in terms of market value — has seen its share price go up 30 per cent in the past 15 months.

IOC by far remains the biggest OMC in terms of profits and revenues. In 2018-19, its sales and profits were nearly twice that of BPCL at Rs 5.3 trillion and Rs 17,377 crore, respectively. BPCL has seen re-rating with the stock currently trading at 13 times its estimated 12-month earnings. IOC and HPCL trade at single-digit price-to-earnings multiple.

The Centre has put on the block its 53 per cent stake in BPCL. Global oil majors such as Russia’s Rosneft, Saudi Arabia’s Aramco, and UAE’s Abu Dhabi National Oil Company are considered to be in the fray to buy the state-owned firm.