Bharat Petroleum Corporation Ltd (BPCL) share price fell in the afternoon session today, after international credit rating Moody's Investors Service said it placed the firm's rating on 'review for downgrade' on government's decision to sell its entire 53.29% stake in BPCL and transferring the management control to a strategic buyer.
The share price of the country's second-biggest state oil refiner fell 2.49% to the day's low of Rs 494.5 against the previous close of Rs 507.15 on BSE.
BPCL share price has lost 8% in the last four sessions. The share has fallen over 4% in a week and 5% in one month. However, it has risen 36.82% on a year-to-date basis.
BPCL stock price trades higher than 50, 100 and 200-day moving averages but lower than 5 and 20-day moving averages. Volume-wise, 4 lakh shares and 125 lakh shares traded on BSE and NSE today.
Moody's said the review for downgrade takes into account the uncertainty with respect to both the support incorporated into BPCL's rating as well as its BCA. The ratings placed on review for a downgrade include BPCL's ba1 baseline credit assessment, its Baa2 issuer rating and Baa2 backed senior unsecured rating for Bharat PetroResources Ltd, a subsidiary of BPCL.
"Post the government's stake sale, we will not include the two-notch uplift from government support in BPCL's rating. This could result in a downgrade of BPCL's ratings to Ba1, assuming there are no changes to its fundamental credit profile, including our assessment of liquidity and refinancing risk which could impact the BCA," said Vikas Halan, Moody's Senior Vice President.
Moody's added that BPCL has been operating under government control and it's business strategy has been in line with government policy and objectives. Thus, any change in ownership could result in the company revising its business strategy or financial policies, which could have implications for its standalone profile, it added.
"Our assessment of BPCL's credit profile and any resultant rating action, post the stake sale, will depend on the ability and willingness of the buyer to provide extraordinary support to BPCL in the event of distress, and also the company's ability to maintain its standalone credit strength," the rating agency said in a statement.
BPCL shares closed 2.14% or 10.85 points lower at Rs 496.30 on BSE today.
(With inputs from PTI)