HPCL may finally become an arm of upstream ONGC: Angel Broking

Views of Mr. Vaibhav Agrawal (Head of Research and ARQ):

"The Government of India is scheduled to take its decision on diluting its 51.11% stake in HPCL by the end of July. The entire stake of the government will be sold to ONGC and HPCL will become a subsidiary of ONGC. In a way, this will contribute to the divestment target to the tune of nearly Rs.20,000 crore. The government has underlined that this was less of a divestment and more of a strategic consolidation. This way, the government still retains indirect control over HPCL through ONGC.

The idea of merging HPCL and ONGC was first mooted in the 2016 Union Budget. Globally, the trend is towards end-to-end oil conglomerates. Only in India extraction, refining and marketing have been traditionally separated. Consolidating the operations of HPCL and ONGC will pave the way for more such mergers and the creation of a hydrocarbons behemoth that can take on global oil giants like Shell, Exxon, Chevron, Aramco, Total and ENI. While the final structure of this proposed merger will only be known later, the general expectation is that the government may adopt the holding company route."

Shares of HINDUSTAN PETROLEUM CORPORATION LTD. was last trading in BSE at Rs.374.7 as compared to the previous close of Rs. 359.3. The total number of shares traded during the day was 773675 in over 10041 trades.

The stock hit an intraday high of Rs. 382 and intraday low of 361.8. The net turnover during the day was Rs. 287826354.

Source : Equity Bulls

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