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MUMBAI, Feb. 5

IBP's disinvestment process, which concluded on Tuesday with the official announcement granting 33.58 per cent stake to IOC, is seen to improve the ratings for upcoming candidates, BPCL and HPCL.

With IBP shares getting a premium of 80 per cent to the current market price, shares of other oil PSUs — HPCL and BPCL — which are to be divested by July are expected to be re-rated by the market, dealers and analysts said.

The stock of BPCL gained 9.32 per cent at Rs 266.90 on the Bombay Stock Exchange on Tuesday while HPCL closed 6.55 per cent higher at Rs 204.95.

"With the Government stake in IBP going at such a high price, BPCL and HPCL should also get much more than this," said an analyst with a domestic brokerage firm. An analyst with a foreign brokerage firm said. "The current market price of IBP is over six times that of its book value, while for BPCL and HPCL it is 1.96 and 1.07 respectively." He said if IBP could be traded at such a premium to book value, why not BPCL and HPCL.

On Tuesday, IOC and IBP share prices shot up by 20 per cent following the Government's decision to sell its 33.58 per cent stake in IBP to IOC at Rs 1,552 per share, an 80 per cent premium on Tuesday's market price. The share price hit the upper circuit at Rs 861.40 but closed marginally lower at Rs 859.7. IOC, which bagged IBP, also gained 20 per cent at Rs 178.05 on BSE, from Monday's close of Rs 148.40

However, analysts do not see any major development in VSNL. "Considering the declining prospects of its main business, PSU structure, regulatory uncertainty and fewer business opportunity (not allowed to bid in basic and cellular services bidding process), the stock price should trade at a discount to its value," an analyst said.

The VSNL share did not witness much action. The scrip closed at 168.25, marginally up from Monday's close at Rs 167.85.

Stock brokers, however, are not bullish on IBP at the current price. "Small investors should start booking profits in IBP shares as after the open offer, there will be nothing to keep the prices at that level," said Mr Arun Kejriwal of KRIS Research. He said the stock has already appreciated by over 100 per cent in the last one month.

A dealer with a domestic brokerage said. "Even if IOC's open offer price of Rs 1,552 is there for IBP shares, not more than 50 per cent of the shares would be accepted by IOC."

He said the floating stock of IBP is 40 per cent and as per the SEBI Takeover Code, IOC has to make an open offer for a minimum of 20 per cent. Under these situations, 20 per cent of the shares would still be in the market.

Dealers also cited the case of Castrol open offer, which was at a premium of almost 50 per cent of the market price but after the offer closed, the share price of the multinational fell.

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