Castrol India Shares Hit Over Two-Month High After BP Agrees To Sell Majority Stake In Parent

The shares of Castrol India rose over 8% and hit over two-month high on Wednesday after BP agreed to sell majority stake in Castrol to Stonepeak in a Rs 89,758 crore ($ 10 billion) deal including debt.

The UK oil giant said it has reached an agreement to offload 65% stake in the lubricants unit, in a statement on Wednesday. BP will retain a minority interests which will be through ha joint venture, said Bloomberg. This is in alignment with BP's plan to offload $20 billion of assets by the end of the next year.

Stonepeak has to make mandatory open offer to acquire shares from the public as part of its broader deal to buy parent Castrol from BP Plc. Indian securities law mandates an open offer to the public when an entity purchases more than 25% stake in a company.

BP had kicked off the sale process for Castrol earlier in February after Chief Executive Officer Murray Auchincloss revealed plans to reset the company. The CEO had promised to refocus on oil and gas, reduce debt and slash cost, but this plan was criticised by Elliott Investment Management.

The scrip rose as much as 8.86% to Rs 202.40 apiece on Wednesday, the highest level since Oct. 16. It pared gains to trade 7.03% higher at Rs 199 apiece, as of 1:25 p.m. This compares to a 0.04% decline in the NSE Nifty 50 Index.

It has fallen 1.36% in the last 12 months. Total traded volume so far in the day stood at 1.10 times its 30-day average. The relative strength index was at 41.36.

Out of five analysts tracking the company, three maintain a 'buy' rating and two recommend a 'hold,' according to Bloomberg data. The average 12-month consensus price target stands at Rs 232.40 indicating an upside of 17.1%.