Chennai Petroleum Corp shares surged and held gains on the news reports of a possible merger with the parent, oil giant Indian Oil Corporation.
Shares of the refiner Chennai Petroleum were trading up 6.18% at Rs 382, after rising to the day’s high of Rs 387 amid flatter markets. BSE Sensex was up 0.08% at 28,352.34 points.
Earlier, Indian Oil Chairman said in an interview to Reuters that the behemoth would like to merge the subsidiary Chennai Petro with itself as part of a government plan to integrate state-run oil firms. “Chennai Petroleum will benefit by integrating with IOC,” Reuters quoted Indian Oil Chairman B Ashok as saying.
CNBC TV18 also said that the merger ratio could be more favourable for Chennai Petroleum’s shareholders, given the huge gap between the market capitalisation of both the companies, and the much lower price-earning multiple for the smaller company.
Indian Oil shares fell 1.85% to Rs 380.3, even as CNBC TV18 analyst suggested that there would be no significant dilution to its valuations, again due to the difference in both the companies’ market capitalisation. Indian Oil is valued at about Rs 1.84 lakh crore, while Chennai Petroleum’s valuation is at about Rs 5,500 crore. Read More…