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Indian Oil Corporation Ltd (IOC) fell as much as 4.7 per cent to Rs 176, its lowest since January 31, 2017. Similarly, Bharat Petroleum Corp Ltd too dropped as much as 4.1 per cent to Rs 429.
A PTI report said Indian Oil and Bharat Petroleum may buy 26 per cent stake each in gas utility GAIL (India) Ltd, paying the government over Rs 20,000 crore each to become integrated energy firms.
IOC and BPCL may split the government's stake in GAIL equally among themselves making it their subsidiary, and GAIL will continue to operate as a listed company with an independent board, the report said. IOC, BPCL and GAIL are unrelated businesses and since the government needs money they are forcing IOC and BPCL to pay out for its stake in GAIL, Nitin Tiwari, an analyst with Antique Stockbroking, said.
Also, IOC and BPCL have a fair amount of debt on their balance sheets and on top of that they will be adding more debt to pay for the transaction, so there is a negative implication related to that, Tiwari added.
Shares of GAIL rose as much as 1.6 per cent to Rs 448.
The companies did not immediately respond to Reuters’ request seeking comment.
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