BPCL having declared good Q2 consolidated results, with an EPS of Rs. 11.50 for Q1 and Rs. 21.85 for H1 FY21, is seeing revival of interests by the potential acquirers, in strategic sale move by the Government. Share ruling at Rs.355 is translating into Market Cap of Rs.77k crore, with Govt stake at 53%.
BPCL is holding pricey assets, with about 15,500 Petrol Pumps (valued at Rs. 25k cr), 2 Refineries with an aggregate capacity of 27.5 MMTPA (valued at Rs. 75k cr), 62% stake in Numaligarh Refineries (valued at Rs. 12k cr), 22.5% strategic stake in IGL (valued at Rs. 6k cr), 12.5% strategic stake in Petronet LNG (valued at Rs. 4.5k cr), 50% strategic stake in Bharat Oman Refineries (valued at Rs. 9.5k cr), Overseas Exploration assets 22.5% (valued at Rs. 10k cr) and other investments and assets (valued at Rs. 10k cr) aggregating Rs.152k cr. Net debt of Rs. 47k cr. leaves net EV at Rs. 105k cr.
It is most likely that Govt. may revive plans to monetize its stake in this FY itself. Incidentally Auto sales and Petro product demand seen having returned back to pre Covid levels, while private players are seen expanding their footprint in this space. Infact good numbers were seen from IOC & HPCL as well, thus seeing re-rating of the sector as well.
So, expect re rating of the stock (as it is seen ruling at lower end of the valuation range as well), on revival of hopes of strategic sale.