BPCL Privatisation: Saudi Aramco Looking To Buy Stake

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BPCL rallied by about 5 percent in the morning trade on October 16 after media reports suggested that Saudi Aramco is interested in buying the government’s 53.3 percent stake in BPCL as it gives the oil giant an opportunity to enter into one of the of highest growing oil retail markets.

As per reports, BPCL strategic sale could take place at Rs 510-Rs 1,100 a share. Reacting to the news, BPCL was trading 4.5 percent higher at Rs 512 at 09:30 AM. The stock rallied over 35 percent from 31 December 2018 closing level of Rs 362 on the BSE.

Brokerage firm Sharekhan said that the move is positive for the stock and could lead to re-rating. “We have been highlighting that stake sale to foreign/private company would help to unlock the real value of BPCL and could re-rate the stock. We have a Positive view on the BPCL,” said a report.

The Indian government is looking at selling its 53.29 percent stake in BPCL to a strategic investor. Emkay Global maintained a buy rating and raised the target price of the stock.

The research house has maintained buy call on the stock and raised the target to Rs 570 from Rs 485 per share earlier. It also raised EV/EBITDA multiple to 7.2x from 6.9x and FY20/21E EPS by 11%/8%, factoring in higher GRM & marketing margins.

Depending on valuation methods, the FV could be in the range of Rs 550-800 per share, it added. ICICI Securities also maintained a buy call with a target of Rs 560 per share. The strength in refining margin sustaining until March 2020 may boost bid price.

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