Privatization of BPCL Saudi Aramco may be interested to buy govt stake in BPCL BPCL reveune dips

1. BPCLValuation
Divya Adhikari
Amity University, Mumbai

3. BharatPetroleum
stakesalemayentice
Relianceamidrising
Indiaenergydemand
(Oct2019)
 India has proposed to fully privatize state-owned fuel retailer
Bharat Petroleum Corp. could potentially draw interest from
energy giants including billionaire Mukesh Ambani’s Reliance
industries.
 The Indian government held more than 53% in Bharat
Petroleum. The government's potential exit is expected to
enhance the shareholder value, as it rids the company of a
persisting overhang of state-intervention in setting fuel prices.
 In the past, several energy majors including Saudi Aramco and
France's Total had shown interest in setting up refining
operations in India where energy demand is rising. The interest
levels significantly increased when the government brought in
reforms in the sector, including deregulation of oil prices.
 Analysts expect Mumbai-based Reliance Industries to be a
serious contender for Bharat Petroleum stake.

4. SaudiAramco
interestedinbuying
government’sstakein
BPCL (Oct2019)
 State-owned Saudi Aramco may be in the fray to buy out
Indian government’s stake of Bharat Petroleum Co. ltd, as it
gives the oil giant an opportunity to pierce into one of the
world’s biggest oil retail markets, sources privy to the matter
said.
 Aramco, which is currently in the process of an IPO that
could value the company at $1.5 trillion to $2 trillion, is
eying the Indian market through various possible deals.
 It is looking at partnering with Reliance India Ltd in its oil
and chemical business and had signed a memorandum of
understanding last year along with ADNOC to make an
investment in government of India’s Ratnagiri Refinery &
Petrochemicals Ltd. (RRPCL).
 The sources also said that Aramco may show interest in
BPCL transaction advisors when they host roadshows in
Middle East soon.

5. BPCLshareprice
declinesafter
government’sstakesale
announcement (Nov
2019)
 Bharat Petroleum Corp. Ltd (BPCL) shares fell as much as
3.2% in intra-day trade after the cabinet gave an in-principle
approval to the government to sell its stake in the company.
 Finance minister Nirmala Sitharaman on Wednesday
announced that the government will sell its 53.29% stake to
a strategic buyer, ceding management control. The proposed
sale will, however, exclude the strategic Numaligarh
Refinery Ltd (NRL) in Assam, which will be later sold to
another state-run firm, given India’s need to secure fuel
supplies for security forces in the north-east.
 “Our replacement cost-based value of Rs 583 for BPCL
includes Rs 62 per share or 10.6%. Our base case PE based
target price of Rs 512 includes a similar value for NRL. The
stake sale, excluding NRL, will only impact governments
receipts”, Nirmal Bang said

6. BPCLnettreblestoRs
2,051croreinQ3,
revenuedipsonlowoil
prices(Feb2020)
 State-owned Bharat Petroleum Corp Ltd (BPCL) on
Thursday reported near trebling of net profit in the
December quarter to Rs 2,051.43 crore.
 BPCL had posted a net profit of Rs 698.62 crore in
October-December 2018, the company said in a
regulatory filing.
 Revenue from operation dropped to Rs 85,926.70 crore
from Rs 89,324.86 crore a year ago on lower oil prices.
 BPCL said pre-tax profits from its mainstay oil refining
and fuel market business jumped to Rs 2,246.88 crore in
October-December 2019 from Rs 637.89 crore a year
ago.

7. Why Reliance is
interested to buy
BPCLshares
 RIL will bid for BPCL's stake despite the company
looking to reduce stake in refining/chemicals and
planning to be a zero net debt company. Acquisition of
BPCL's stake will get RIL 25 per cent market share plus
access to the PSU's real estate.