HPCL and BPCL rose in a lacklustre market on Tuesday on buying interest from institutions, after the Supreme Court gave a virtual clearance to the Centre to proceed with the privatisation of both the public sector oil refiners.

By 11:10 IST, the HPCL stock up by 1.24% at Rs 298.25, while BPCL rose by 2.03% to Rs 220.80 on the BSE. Meanwhile HCPL recorded a volume of over 311,000 shares, while BPCL registered over 104,000 shares.

As per market talks Kotak Securities were said to be the active buyer on both the state-run refinery counters.

Renewed buying interest in the public sector undertaking refinery stocks were purely on the Supreme Court clearance to the Centre, to proceed with the privatisation of HPCL and BPCL, saying the pendency of a petition challenging the same should not deter the government from divesting its equity stake in these two companies.

A Bench comprising Justice M B Shah and Justice Arun Kumar adjourned the hearing on a writ petition filed by Federation of All India Petroleum Traders.

However dealers feel that the stock will not hold at higher levels following the subdued market condition due to the US-Iraq war, as players do not want to take fresh positions in the market. Also, there are fears that the rise in global crude oil prices will hit 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, there were reports that the government has invited bids for global advisor to the divestment process of BPCL, while the Centre has already appointed HSBC as global advisor for the divestment in HPCL.

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 (Rs 3.3 billion) 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