When the government of India is mulling a plan to divest its shares in BPCL, the globally renowned investment consultant JP Morgan has come to the conclusion that it is a great investment. Interestingly enough, talking about the possible disinvestment in BPCL, Managing Editor of Zee Business Anil Singhvi said that he did a show on the same issue a couple of weeks ago and had come to similar conclusion vis-à-vis the stock price and the report from JP Morgan is an endorsement to what the Zee Business showed.

However, according to Singhvi the only risk in BPCL stock price is that if the divestment itself doesn’t happen. Varun Dubey, Senior Research Analysts at Zee Business also says that the fair value according to the report from JP Morgan has been placed in the range of Rs 700-Rs 750. It is to be noted that the government has indicated that it would complete BPCL’s stake sale process as early as possible in the 2021-22 fiscal year.

Government may get Rs 80000 crores

Currently, the government owns nearly 50% to 52% stake in BPCL and if the whole share is sold, the report from JP Morgan says, could fetch Rs 80000 cr. According to the report rising Crude prices and normalization of GRMs are two major factors that are going to help BPCL’s valuation. In his talk with Varun also added that upgrading the Kochi Refinery would further add to the valuation of the company. The report puts BPCL’s FY23 EPS at around Rs 48 per share which gives a fair value of Rs 690 per share; however, since, government would want to have some premium over it, JP Morgan has placed the price between Rs 700-Rs 750.

The Company acquires Oman’s 36.6% stake in Bina Refinery

This is great news for the investors who are looking for investing in BPCL as the company has signed a sales purchase agreement with Oman’s state-owned oil company OQ. Under the agreement it would purchase entire stake in the Bina refinery project in Madhya Pradesh. The news has come at a time when Modi government is looking to offload its entire stake in BPCL to get enrich its coffers.

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