IBP likely to be valued at Rs 650 a share, feel analysts

Sujoy Manna

Mumbai, Aug 21: IBP Ltd - the standalone petrochemical marketing company — is likely to be valued at Rs 650 per share, post its demerger with Balmer Lawrie, say analysts. The current market price of IBP Ltd is hovering around Rs 300 per share.

The divestment programme has received a fresh boost with the decision to demerge Balmer Lawrie Limited along with the disinvestment of the holding company, which is due in September 2001.

The Government of India, which holds a 59.58 per cent stake in IBP, proposes to disinvest 33.58 per cent of its holding in the company.
Reliance Petroleum, Shell and Caltex are understood to have emerged as the front-runners in the race to acquire a controlling interest in petro fuel retailer, IBP.

According to the analysts, IBP is a readymade distribution set up for the bidders with a good asset base in terms of the number of distribution outlets along with impressive financials.

Market sources feel that since the floating stock is less with daily volumes traded around 3,000 shares and majority of the stocks being held by financial institutions, the stock price would move up with demand as and when the disinvestment process starts.

According to merchant banking sources, the government seems to be in favour of Caltex owing to its earlier tie-up, marketing alliances and past working experience. However, they also added that Reliance Petroleum appears to be keen on bagging the bid in order to gain a foothold in marketing of petro fuel, which will be a part of its forward integrating efforts given its well established infrastructure in oil production. The advisor to the department of divestment on IBP — HSBC Securities — could not be reached for comments despite repeated attempts.

Indian Oil Corporation (IOC), Reliance, Shell, Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation (HPCL), Nagarjuna Fertilisers Ltd, Essar Oil, global oil majors Caltex, Totalfina of France and BHP of Australia are in the fray to take over IBP.

The company had earlier said that a shell company would be formed which would be the controlling unit for Balmer Lawrie. After the demerger, the shell company would control 60 per cent of the shares, while public would continue to hold the balance 40 per cent.

IBP holds 61.8 per cent stake in Balmer Lawrie, which is into greases, lubricants, specialty chemicals, manufacture of freight containers, trading, leasing and travel.

According to the plan approved earlier, IBP’s holding in Balmer Lawrie would be transferred to a new public company, IBP Investment and Finance Co.

The new company would be incorporated in Kolkata with a share capital of Rs 5 lakh and would be managed by government nominees and be subsequently disinvested.