State-owned Bharat Petroleum Corp. Ltd (BPCL) on Thursday said it has stood as guarantor for a $200 million (around Rs 1,661 crore) loan provided by its withdrawn subsidiary.
BPRL International is a wholly owned subsidiary of Bharat PetroResources Ltd (BPRL), which is a wholly owned subsidiary of BPCL.
A corporate guarantee is essentially a promise by the parent company to assume the debt of a group company if the latter fails to repay or service its loan.
In a filing to the stock exchanges, BPCL said the guarantee “could result in financial indebtedness of BPCL in the event of invocation of the guarantee by SBI”.
After the announcement, BPCL shares were trading marginally positive at Rs 355.30, up 0.8 per cent, at 9:49 am on the BSE.
Notably, the stock had closed 2 per cent lower in the previous session after foreign brokerage firm Jefferies downgraded the stock’s rating to ‘underperform’ with a target price of Rs 310 per share.
Jefferies said it expects BPCL to incur an operating loss in the second half of 2023-24 due to increased diesel marketing losses.
Earlier this month, BPCL made headlines when the Indian government announced that it had received Rs 460 crore from the company in dividend tranches, while receiving an additional Rs 2,182 crore from Indian Oil Co. Ltd (IOC).
This came after BPCL in July reported a consolidated net profit of Rs 10,550.9 crore for the first quarter ended June 2023 on the back of a recovery in fuel marketing margins. In the corresponding quarter last year, the company had posted a net loss of Rs 6,147.94 crore.
(Edited by : Asmita pants)