BPCL at the end of market close on September 27 had a market capitalization of about Rs 1.02 lakh crore and even a 26 per cent stake sale at this valuation would fetch the government Rs 26,500 crore plus a control-and-fuel-market-entry premium ranging anywhere between Rs 5,000 crore to Rs 10,000 crore, officials said.
Now that the Government has done the bit on boosting the sentiments of investors and hence the market, there has been a concern of fiscal deficit.
Yes, that’s a true concern – how does the Government plan to bridge the deficit by losing revenues from direct and indirect taxes (they reduced GST on few products and services as well)? As per the data it will help the government meet at least a third of the government’s Rs 1.05 trillion disinvestment target.
Keen to get multinationals in domestic fuel retailing to boost competition, the government is mulling selling most of its 53.3% stake in BPCL to a strategic partner. The members will mull selling the full stake or privatization of the companies.
Interesting move by the Oil Marketing Companies to target higher blending supporting the investments by sugar mills in jacking up the ethanol production capacities. Ethanol is becoming the lifeline for sugar Industry.
As per the reports, still not cleared that whether the government is considering privatization or stake sales will be clear in time. Analysts, however, said that privatization can fetch the government higher revenues.
India aims to sell two or three state-owned firms to local or foreign firms to raise up to 600 billion rupees ($8.5 billion) by March 2020, a senior Finance Ministry recently said in a statement.
BPCL operates four refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity to convert 38.3 million tonnes of crude oil into fuel.
Indian Oil Corp, BPCL, HPCL forms Joint Venture to build World’s longest LPG pipeline worth Rs 10,000 crore
BPCL is trading above strong resistance line indicating a strong bullish bias to continue further. As per the reports Government of India wants to ramp up its divestment operation and sell its stake in AirIndia and BPCL by March 2020.
Well, the sentiment booster will help them getting decent value on divestment’s. IRCTC’s IPO is upcoming. They are planning Air India and BPCL stake sale. Now we will see lot of activity in the primary and secondary markets in the form of divestment’s, M&A, strategic sale etc. So there’s still some good ground to make on fiscal deficit number, however, it’s not a long term sustainable solution.