BPCL recovered from its low of Rs 220 on reports that the divestment ministry is planning to offload a higher (25%) stake through the ADR issue route.

This means 5% more will be offered overseas than what was originally planned.

The scrip of the oil refining major gained 0.90% to Rs 223.90 by 11:10 IST on the news. It had reached Rs 224.20 immediately on the news. Over 200,000 Bharat Petroleum shares were exchanged on BSE till 11:10 IST.

Reports have emerged that the government may offload 25% of the equity to US investors and 10% to the domestic public. Another 5% will be offered to employees of the company at one-third the market price, bringing down the government holding in the company to 26% from 66.20%.

Dealers say the current rise will be short-lived and profit booking may crop up.

In the 13 sessions between 31 January and 20 February 2003, BPCL advanced 18.8% to Rs 221.90 from Rs 186.80 on huge buying from funds following its attractive valuation in view of the company's divestment.

Recently, the government said it would sell 20% of its equity in BPCL in the overseas market and another 15% (4.5 crore shares) in the domestic market (latest reports hold a different proportion). The book-built route will be followed in both the offers to arrive at the issue price.

Dealers hope that reports that the government will be offloading added stake in the overseas market are of veracity as that will enable the company to get better realisations. The huge price differential in the scrips of BPCL and HPCL (about Rs 100 as HPCL currently trades at Rs 320) means that BPCL could fetch a good price from divestment, especially through the ADR issue. The government has said that it will divest in BPCL in the next 6-8 months.

The global advisor for BPCL's offers, likely to be appointed by March 2003, will finalise the modalities of the simultaneous offering in the overseas and local markets

Recently, BPCL announced that it will invest Rs 7,500 crore (Rs 75 billion) in the next five years for floating joint ventures, modernisation, restructuring and brand building. The company plans to open 600 to 700 retail outlets by next year.

Currently, BPCL has about 4,500 retail outlets and a 20% share in the petroleum products market. As per recent reports, BPCL plans to double its refining capacity to 2,40,000 bpd from the current 1,30,000 bpd by October 2004, and modify its refineries so that it can process different grades of oil.

For the third quarter ended 31 December 2002, BPCL recorded a net profit of Rs 233 crore (Rs 2.33 billion), up by 224% over the Rs 71.90 crore it registered in the corresponding period of the previous year. Net sales increased by 29% to Rs 12,645.2 crore (Rs 126.45 billion) from Rs 9,801.1 crore (Rs 98.01 billion) in DQ 2001.

The board of directors declared an interim dividend of 20% for the financial year 2002-03 (Rs 2 per share).

BSE code: 500547