HPCL and BPCL declined in a lacklustre market on Thursday on selling pressure from institutions.

By 15:20 IST, the HPCL stock down by 1.90% at Rs 284.20, while BPCL declined by 2.59% to Rs 209 on the BSE. Huge volumes accompanied the slide in these stocks. HCPL recorded a volume of over 792,000 shares, while BPCL registered over 522,000 shares.

In eight sessions, between 28 February and 12 March 2003, the HPCL and BPCL scrips lost 8.87% and 6.14% respectively.

As per market buzz, public sector banks sold the HPCL, BPCL stocks.

Dealers said that with the overall market gripped by US-Iraq war fears, players do not want to take fresh positions in major stocks. With no fresh developments on the divestment front, players preferred to offload the HPCL, BPCL stocks. Also, there were fears that in case of a war, global crude oil prices may gallop, hitting the profit margins of these two state-run oil refiners adversely.

Earlier, the Centre announced its plans of offloading its equity stake in BPCL through an initial public offer  route, and privatising HPCL through a strategic sale.

Recently, the Centre appointed HSBC as global advisor for the divestment in HPCL. It also invited Expressions of Interest from potential strategic investors for its 34.01% stake in HPCL by 17 March 2003.

In January 2003, the Centre gave the green signal for the divestment in HPCL and BPCL. As per its plans, HPCL's equity (34.01%) will be sold to a strategic partner and 5% to the company's employees. The Centre will retain 12% holding in the company. Currently, the Centre's stake in HPCL is at 51.01%. in respect of BPCL, it will come out with an IPO for 35.2% stake, 5% will be reserved for company employees and retain 26%.

HPCL has about 4,600 retail outlets and a 20% market share in retailing petroleum products. 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. The total cost of the expansion and modernisation is estimated at Rs 1,831 crore (Rs 18.31 billion), of which Rs 1,200 crore (Rs 12 billion) has already been spent.

For the third quarter ended 31 December 2002 results HPCL registered a gigantic 444% rise in net profit to Rs 330.62 crore on a 28% jump in net sales to Rs 14,210.23 crore (Rs 142.1 billion).

BPCL recorded net profit at 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.

Both these companies recommended an interim dividend of 20% (i.e. Rs 2 per share) for the financial year 2002-03.

BSE codes: 500104, 500547