A couple of institutions, including Alliance Capital, are accumulating BPCL on Thursday as the stock looks attractive in view of the company's forthcoming divestment.

The scrip of the oil refining PSU has responded to this buying by climbing 3.12% to Rs 223.40 on BSE by 11:45 IST. It recovered from its intra-day low of Rs 212.50. The scrip recorded volumes of over 1.02 shares by that time.

In the 12 sessions between 31 January and 19 February 2003, BPCL advanced 16% to Rs 216.65 from Rs 186.80.

Dealers say the stock is witnessing huge buying from funds following its attractive valuation in view of the company's divestment.

The Centre intends to reduce its shareholding in BPCL from 66.2% to 26% by selling 35.2% stake to the public (via domestic and overseas issues). Another 5% will be offloaded to the company's employees. The government plans to disinvest in BPCL in the next 6-8 months.

Recently, the government said it will sell 20% of its equity in BPCL in the overseas market, while another 15% (4.5 crore shares) would be offloaded in domestic markets. The book-built route will be followed in both the offers to arrive at the issue price.

The global advisor for BPCL's offers, likely to be appointed by March 2003, will finalise the modalities of the simultaneous offering in overseas and local markets

Recently, BPCL announced that it will invest Rs 7,500 crore (Rs 75 billion) in the next five years for floating joint ventures, modernisation, restructuring and brand building. The company plans to open 600 to 700 retail outlets by next year.

Currently, BPCL has about 4,500 retail outlets and a 20% share in the petroleum products market. As per recent reports, BPCL plans to double its refining capacity to 2,40,000 bpd from the current 1,30,000 bpd by October 2004, and modify its refineries so that it can process different grades of oil.

For the third quarter ended 31 December 2002, BPCL recorded a net profit of Rs 233 crore (Rs 2.33 billion), up by 224% over the Rs 71.90 crore it registered in the corresponding period of the previous year. Net sales increased by 29% to Rs 12,645.2 crore (Rs 126.45 billion) from Rs 9,801.1 crore (Rs 98.01 billion) in DQ 2001.

The board of directors declared an interim dividend of 20% for the financial year 2002-03 (Rs 2 per share).

BSE code: 500547