Foreign brokerage CLSA said the stake value was 16 per cent lesser than what it had assigned and could impact the fair value of the stock by Rs 9 or 2 per cent. But “this sale is an important and necessary step towards completing the privatisation process by July-August, which should keep the excitement high in the stock in the coming months,” CLSA said.
The stock rose 6.02 per cent to hit a high of Rs 482.40 on BSE.
Emkay Global said the deal for the 61.65 per cent selloff implies a valuation of Rs 16,020 crore for the refinery as a whole. With Rs 3,000-4,000 crore of average annual Ebitda and Rs 1,280 crore of net cash equivalent, the deal implies 5.5-7.9 times PE and 3.6-4.7 times EV/Ebitda, which is lower than the ballpark rate of 8-10 times and 5-7 times, respectively.
The deal, however, lowers BPCL’s price target by Rs 3 per share, Emkay said, suggesting that the value was considerably higher than what was quoted in media reports and Assam government’s budgeted valuation of Rs 10,000-13,000 crore.
Emkay, which sees the deal as neutral to positive said the sale is an important milestone in BPCL’s disinvestment process, and the cash proceeds may be paid to BPCL shareholders as a special dividend of Rs 40-50 share over the next 1-2 months. The brokerage retained a ‘Buy’ and ‘overweight’ rating on the stock with a price target of Rs 495.
Meanwhile, JPMorgan finds the stake value higher than expectations. The stake sale, it said, allows the privatisation process to move to the critical due diligence stage. It has raised its price target for BPCL to Rs 550 from Rs 525.
Motilal Oswal has reiterated its optimism on the divestment process going through given the earnest efforts of the company management. Its valuation implies an FY23 book value of 2.4 times, which is at a 15 per cent premium to FY15-18 post reform period. The brokerage has a price target of Rs 520.
