BPCL lost further ground on Tuesday on selling pressure.

The stock of the state-run oil refiner was down by 2.7% to Rs 194.90 on the BSE. It, however, recovered from the day's low of Rs 188.20. 1.08 million shares changed hands on the counter.

On Monday, the stock plunged by 6% to Rs 200.40 on disappointment over the lower-than-expected interim dividend of 20% declared by the company last Friday. The stock slipped on Monday even after the government cleared the divestment in BPCL through the open market route.

BPCL scrip has declined sharply in the last few sessions. From a recent high of Rs 227.85 on 16 January 2003, the scrip has shed 14.4% to the current Rs 194.90. A section of the market feels the BPCL scrip offers good value at the current level.

Dealers said there were concerns in the market regarding the timing of the divestment in BPCL, since the privatisation is proposed through the market route. The Cabinet Committee on Divestment last Sunday approved the divestment in HPCL and BPCL but it has not specified the timeframe for their sell-off.

With regard to BPCL, the government will come out with a public issue for 35.2% of the equity, 5% will be reserved for its employees and it will retain 26%. Currently, the government holding in BPCL is 66.2%.

For the third quarter ended 31 December 2002, BPCL posted a net profit of Rs 233 crore (Rs 2.33 billion), up 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 company's results were better than capitalmarket.com poll estimates of three oil and gas analysts, that had projected net profit of Rs 121-208 crore (Rs 1.21-2.08 billion) and net sales between Rs 10,957 crore (Rs 109.57 billion) and Rs 11,567 crore (Rs 115.6 billion).

The company's improved DQ 2002 financial performance is due to increase in the import parity prices of its products during the period, resulting in increased sales realisation. After the government dismantled the administered pricing mechanism, Indian Oil Corporation, HPCL and BPCL meet once a fortnight to review the prices of petroleum products.

Over the past decade, BPCL has transformed itself from a mundane commodity firm into a savvy retail player. Despite being a public sector company, it has always been applauded for its pro-active, first-off-the-block approach.

BPCL has a national presence with 4,562 retail outlets and an overall market share of over 20%. But the company will have to work even harder to protect its market share. BPCL has put in place three strategic teams - one each for strategic planning, brand management and retail outlets.

Given the fact that new entrants like Reliance are likely to concentrate on setting up outlets along the highways, BPCL has a focussed team that is charting out a pre-emptive strategy. It has lined up close to 400 such outlets along the Golden Quadrilateral, while a few have been planned in the smaller towns to cater to the specific needs of agriculturists. The thrust, however, will continue to be on the retail business.

BSE Code: 500547