Government suspects BPCL's attempt to reduce share price

The Center is raising around Rs 90,000 crore to divest its stake in PSUs

New Delhi (Natural Energy News): Two government officials said the Center suspected that Bharat Petroleum Corporation Limited (BPCL) share price was being manipulated as it prepared to control its stake in the state-run firm.

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Concerns over the share price manipulation of India's second-largest fuel retailer have been discussed within the government, noting that its privatization is a significant milestone in Centra's tr2.1 trillion division target for 2020-21. “Somebody is playing the market to keep BPCL stock price down. This question has been examined within the government, ”said one of the officials petitioning obscurity.

BPCL's stock has weakened the benchmark even as the markets have risen to new heights. However, shares of some other state-owned companies have also been undermined by broader markets.

BPCL shares rose 13.10, or 3.18% to Thursday 425 on Thursday, while the Sensex rose 0.19% to 49,584.16 points. BPCL shares have lost 9.93% in the last one year with the BPCL Oil & Gas Index gaining 3.92%. However, RIL gained 29.44% while its peers HPCL and IOCL lost 8.29% and 18.72% respectively.

The center is raising around ₹ 90,000 crore from divesting its stake in BPCL. The Center has attempted to benchmark BPCL's price for some of its publicly traded peers. The Center's target price for its 52.98% stake in BPCL is also based on the value of the firm's assets.

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The Vedanta Group and two US funds — Apollo Global and I Square Capital — have allegedly proposed manifestations of interest for BPCL. The Department of Investment and Public Asset Management (DIPAM) is managing BPCL's privatization process, while Deloitte Touche Tohmatsu is the India transaction advisor.

Analysts said the steep increase in the excise duty of transport fuels could be the reason for the underperformance of BPCL's stock. "I think that stakes of OMC (oil marketing companies), including BPCL, reduced the SENSEX due to an unstable global refining environment, but primarily due to the enormous gain in excise duty of diesel and petrol during the year 2020," Gagan Dixit, Vice president, institutional said. Equity Research, Elara Capital.

“High excise duties on diesel and petrol pose a risk to OMC's marketing margins. If international crude prices rise to $ 60 per barrel, then retail prices of diesel and petrol prices exceed 100 liters and this may put pressure on OMC margins. As a result, the expectation of relief through a reduction in dependence on government will increase, and institutional investors are not like that situation, ”said Dixit.

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When contacted, a Deloitte spokesperson said in an email: "We are bound by privacy obligations and are unable to comment on customer-specific matters."

An external spokesperson for Apollo Global declined to comment.

Petroleum and natural gas ministries spokespersons and finance, DIPAM, Vedanta Group and I Square Capital did not respond to press queries until late Monday night.

When contacted by phone on Tuesday, a spokesperson for Vedanta Resources declined to comment.

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