Govt to reconsider valuation of Bharat Petroleum

The enterprise value of Bharat Petroleum Corporation Limited (BPCL) is estimated at around ₹800 per share, almost double its prevailing market value, which has caused concerns within the government as a section feels that the controlling stake in the oil company cannot be sold only on the basis of its stock price, two officials with direct knowledge of the matter said.

One way of selling a company is at its market value, when its share price is higher than the enterprise value — for example a knowledge-based entity that has insignificant physical assets.

But a company like BPCL, which has significant physical assets, cannot be sold merely on the basis of its share price, the officials said, requesting anonymity. Enterprise value is a comprehensive measure of a company’s total valuation, beyond its equity market capitalisation.