The board of Hindustan Petroleum Corp Ltd (HPCL) will on November 4 consider a share buyback plan as the company management feels the share price is lower than the value it deserves. HPCL, a subsidiary of state-owned Oil and Natural Gas Corp (ONGC), has no immediate history of a share buyback.
In a notice to the stock exchanges, HPCL said its board of directors will meet on November 4 to consider financial results for the second quarter (July-September) and half year (April-September for 2020-21 fiscal. "The board will also consider a proposal to buyback the fully paid equity shares of the face value of Rs 10 each of the company," it said.
The firm did not give details of the proposal. Sources privy to the development said the move is an assertion of management that the company's share price is lower than its value it deserves.
HPCL shares closed at Rs 179.60 on the BSE, up 4.54 per cent from the previous day's close. The rate is about a third of Rs 473.97 per share that ONGC paid in January 2018 to acquire the government's 51.11 per cent share in HPCL.
HPCL is the nation's second-biggest oil retailer. It owns two refineries – a 7.5 million tonnes unit in Mumbai and another 8.3 million tonnes facility at Visakhapatnam in Andhra Pradesh. It also owns half of the 11.3 million tonnes Bathinda refinery in Punjab and is a 16.95 per cent owner of the 15 million tonnes a year Mangalore Refinery. It owns and operates 17,171 out of 71,843 petrol pumps in the country and is the second-largest fuel retailer after Indian Oil Corp (IOC).