ONGC-HPCL deal: Is the deal fair for HPCL shareholders?

Key Highlights:

• Union Cabinet approved HPCL's 51% stake sale to ONGC
• 40% of government's stake sale target for FY18 achieved if the deal is valued at Rs 30,000 crore
• Analysts believe that this deal is not a fair deal for retail shareholders of HPCL.

Union Cabinet on Wednesday announced 51% stake sale in Hindustan Petroleum Corporation Ltd (HPCL) to Oil & Natural Gas Corporation Ltd (ONGC). 

Post ONGC buying the government stake, HPCL will become subsidiary of India's largest oil producer with its board continuing to function like before.

On Thursday, shares of ONGC gained while of HPCL dropped. 

At 1400 hours, the shares of ONGC were trading at Rs 166.15 per piece, up 1.90% or  Rs 3.10. While HPCL shares were trading at Rs 368.30 per piece, down 4.09% or Rs 15.70 on BSE. 

While both the parties have not yet mentioned the exact amount of the deal, according to a PTI report, the government will fetch around Rs 26,000 crore to Rs 30,000 crore from this stake sale.