Shares of Bharat Petroleum Corporation Limited (BPCL) fell 2 per cent to Rs 318 on the BSE in Friday’s trade, in an otherwise firm market, as the government has called off the privatisation process of the state-owned oil marketing company for now. The development comes after two of the three companies that had shown interest in acquiring the public sector undertaking (PSU) withdrew their bids. In comparison, the S&P BSE Sensex was up 0.74 per cent at 54,653 points at 1:00 PM.
Based on the decision of the Alternative Mechanism on strategic disinvestment, which comprises Finance Minister Nirmala Sitharaman, Roads and Highways Minister Nitin Gadkari, and the head of the ministry concerned (in this case Petroleum Minister Hardeep Singh Puri), the privatisation of BPCL and the expressions of interest received from the bidders stand cancelled, the Department of Investment and Public Asset Management (DIPAM) said in a statement. The decision on its re-initiation will be taken in due course following a review, it added.
BPCL was trading lower for the third straight day, after the company reported 82 per cent year on year (YoY) decline in net profit at Rs 2,131 crore in the quarter ended March 2022 (Q4FY22) as the firm held fuel prices despite rise in cost. It had posted net profit of Rs 11,940 in Q4FY21.
Revenue from operations, however, rose 25 per cent YoY to Rs 1.23 trillion on higher oil prices but losses on petrol, diesel and domestic LPG sales dented the financials.
Analysts at Emkay Global Financial Services slightly lowered the target EV/EBITDA multiple from 5.6x to 5.4x with no disinvestment premium anymore, and weak current scenario with negative auto-fuel margins, “We maintain Buy owing to reasonable valuations and expectations of a gradual recovery in margins to normative levels.” the brokerage firm said.
BPCL’s stock had hit a 52-week low of Rs 312.20 in Thursday’s intra-day trade. The market price of BPCL has corrected 37 per cent from its 52-week high level of Rs 503 hit on September 14, 2021.
In the past one month, the stock has underperformed the market by falling 14 per cent, as compared to 4.8 per cent decline in the S&P BSE Sensex.
