State-owned Bharat Petroleum Corp. Ltd (BPCL) on Thursday said that it has turned guarantor for a $200 million loan (around Rs 1,661 crore) availed by its step-down subsidiary.
In a filing to the stock exchanges, BPCL said that it has issued corporate guarantee in relation to $200 million 3-year term loan facility proposed to be availed by BPRL International BV through State Bank of India, DIFC Branch.
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 obligation of a group company if the latter fails to repay or service its loan.
In a statement to exchanges, BPCL said that the guarantee “may result in financial indebtedness of BPCL in case of invocation of guarantee by SBI”.
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After the announcement, BPCL shares were trading mildly positive at Rs 355.30, up 0.8 percent, at 9:49 AM on BSE.
Notably, the stock had closed 2 percent lower in the previous session after foreign brokerage firm Jefferies downgraded the stock to ‘underperform’ with a target price of Rs 310 per share.
Jefferies said that it expected BPCL to incur operating loss in the second half of 2023-24 due to increased marketing losses in diesel.
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Earlier this month, BPCL was in news when the Indian government announced that it has received Rs 460 crore from the company as dividend tranches, while getting another Rs 2,182 crore from Indian Oil Co. Ltd (IOC).
This happened 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.
