HPCL has found new vigour of late ever since the government set off its divestment process by calling in initial bids.

On Tuesday, the scrip of the oil refining and retailing PSU continued its firm run, gaining 2.53% to Rs 326.15 by 14:10 IST. Volumes spiraled to 1.65 million shares on the counter. The upward trend has been so resolute on the counter, that it spurted 96% to its current level from Rs 166.50 on 1 October 2002.

The government plans to offload a 34.01% stake in HPCL and has already flagged off the divestment process on 7 February 2002 by inviting expressions of interest from potential strategic partners. Already, 17 investment bankers, that had applied with expressions of interest to be advisors in the divestment process, are making presentations to the government.

JM Morgan Stanley, DSP Merrill Lynch, Salomon Smith Barney, Kotak Mahindra, JP Morgan, UBS Warburg, ANZ Grindlays, Deutsche Bank, ABN Amro, Ernst & Young, KPMG, Deloitte, Lazard India, Ambit Finance, Rabo Finance and SBI Capital Markets, it is reported, have submitted bids to become advisors for disinvestment in HPCL. Each of these, has been allotted a half-hour slot to make their presentations.

The investment bankers will make their presentations to the inter-ministerial group comprising members of the divestment committee, ministry of finance and the ministry of petroleum & gas. According to market talk, the strategic divestment in HPCL is expected to fetch the government at least Rs 8,000 crore (Rs 80 billion). There is talk that the reserve price for HPCL will be around Rs 600-700 per share (Rs 6-7 billion).

The scrip has also been vindicated by reports that Reliance Industries will bid for a stake in HPCL. On 7 February 2003, the government had invited initial bids for its 34.01% stake in HPCL (by way of a strategic sale). Bidders will have to submit initial bids by 17 March 2003 and the government has set a net worth criteria of Rs 2,500 crore (Rs 25 billion) for eligibility.

Institutions and major operators are believed to be accumulating the stock of HPCL as of now.

Earlier in January 2003, the government had given a green signal for divestment in HPCL (as well as the modus operandi for divestment). According to the Centre, 34.01% of HPCL's equity (government-held) would be sold to a strategic partner and 5% to the company's employees. The government would retain 12%. Currently, the government holding in HPCL is 51.01%.

On 30 January 2003, HPCL unveiled third quarter ended 31 December 2002 results - a gigantic 444% rise in net profit to Rs 330.62 crore (Rs 3.3 billion) compared to Rs 60.81 crore in the corresponding period of the previous year. Net sales jumped 28% to Rs 14,210.23 crore (Rs 142.1 billion) from Rs 11,1156.38 crore (Rs 1111.56 billion) in DQ 2001.

HPCL's board of directors has also recommended an interim dividend of 20% (ie Rs 2 per share) for the financial year 2002-03. The company attributed the solid performance to buoyant international prices coupled with improved refining and marketing margins.

BSE code: 500104