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Government may tweak FDI rules to allow 100% investment in BPCL; share price rises 2%

It is likely that a special provision in India's FDI policy may be inserted to allow full FDI in public sector units (PSUs) under petroleum refining segment.

May 28, 2021 / 10:52 AM IST
Image: Shutterstock

Image: Shutterstock

 
 
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Bharat Petroleum Corporation (BPCL) share price rose 2 percent in early trade on May 28 on reports that the government may tweak Foreign Direct Investment (FDI) rules to allow 100 percent investment in the company.

A consensus has been built up among concerned ministries, and a final decision may be taken very soon, even before the financial bids open.

As per current FDI policy, FDI is restricted to 49 percent under the automatic route in petroleum refining by Public Sector Undertaking (PSU), without any disinvestment or dilution of domestic equity.

According to the sources, the government is planning to amend the FDI policy and FEMA provisions accordingly, so that 100 percent FDI may be allowed through the automatic route in BPCL.

Broking house Prabhudas Lilladher tweaked its FY22/23E estimates for BPCL, as it incorporated actual FY21 numbers and factor in NRL stake sale.

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It believes that increased crude oil supplies from OPEC and Iran, post lifting of sanctions will likely keep crude oil prices range bound and support marketing margins in the medium term. Also, GRMs will recover with pickup in economic activity.

"BPCL remains one of our preferred pick among the OMCs. Maintain buy with a price target of Rs 581 (earlier Rs 505) on rollover," the brokerage added.

On May 27, the company reported an over four times increase in standalone profit at Rs 11,940.1 crore for the quarter ended March 31, 2021. It reported a profit of Rs 2,777.6 crore in the previous quarter.

The board approved a final dividend of Rs 58 a share, which includes a one-time special dividend of Rs 35 per equity share.

The total dividend amounts to Rs 12,581.66 crore, including a special dividend of Rs 7,592.38 crore.

At 09:34 hrs, Bharat Petroleum Corporation was quoting at Rs 475.55, up Rs 7.80, or 1.67 percent.

The share touched a 52-week high of Rs 488 and a 52-week low of Rs 312.10 on 27 May, 2021 and 26 May, 2020, respectively.

Currently, it is trading 2.55 percent below its 52-week high and 52.37 percent above its 52-week low.



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Moneycontrol News
first published: May 28, 2021 10:05 am
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