Mumbai, Nov. 26: Reliance Petroleum Limited (RPL) emerged today as the top traded stock on the bourses after last Friday’s sudden move by Reliance Industries Limited (RIL) to sell 4 per cent of its stake — a little over 180 million shares — for Rs 4,023 crore.
RIL’s stake sale has triggered a buzz of speculation and turned the spotlight on Chevron Corp of the US which holds a 5 per cent stake in RPL and has the option to buy another 24 per cent by 2009.
RIL’s stake in the company has now come down to 70.99 per cent. Ostensibly, the Reliance move was triggered by a desire to increase the free float — the portion of stock held by the public after excluding the promoters’ and institutions’ holdings — and cool the stock which has surged over 233 per cent this year.
But the move to force down the RPL stock also fanned speculation that Chevron could seize on this window of opportunity and exercise its right to raise its stake now rather than later when the stock may rise.
The stock sale was shrouded in mystery with no clear idea of who the buyers were and how the transactions were carried out. In a terse statement to the bourses today, RIL said, “The sale of RPL shares was conducted by transactions through the stock exchanges and has helped to further broad base the shareholding pattern of RPL. The number of shareholders of RPL has increased from 12 lakh at the time of the IPO to 16 lakh.”
In April 2006, Chevron had picked up its 5 per cent stake for Rs 1,350 crore — or Rs 60 per share. Observers believe that Chevron may be reluctant to raise its stake at the current price.
On Monday, the stock closed on the Bombay Stock Exchange at Rs 204.05, down 2.60 per cent or Rs 5.45 from Friday’s close.
The dizzying rise in RPL’s stock price means that a company that has virtually no productive assets as yet has a market capitalisation that is greater than the combined values of three state-owned oil companies — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation.
RPL’s 27-million-tonne refinery is expected to start operations in the second half of next year.
The RPL stock hit a life-time high of Rs 295 early this month amid reports that Chevron could buy 21 per cent in the company for over $6 billion. However, the market has now started to hear different opinions on RPL.
In a report put out on Monday, Goldman Sachs said the 4 per cent sale by RIL could imply a possible future Chevron exit. The foreign brokerage added that Chevron might have to put in over $5.5 billion if it wanted to hike its stake to 29 per cent in RPL. Goldman Sachs has now lowered the price target for RPL to Rs 191 per share.
“Mukesh Ambani is clearly putting pressure on Chevron and sending out a strong signal to the company that if it wants to raise its stake in RPL, it should do so at a higher price,” an analyst said.
