Castrol India rallies 9% as BP plans to sell 65% stake to Stonepeak

Shares of Castrol India rallied nearly 9 per cent on Wednesday after global oil giant BP reached an agreement to offload a 65 per cent stake in Castrol at an enterprise value of $10 billion.

The lubricant company's stock rose as much as 8.8 per cent during the day to ₹202.4 per share, the steepest intraday since June 9 this year. The stock pared gains to trade 7.5 per cent higher at ₹198 apiece, compared to a 0.04 per cent advance in Nifty 50 as of 1:00 PM.

Shares of the company rose for the third straight session and currently trade at 9.2 times the average 30-day trading volume, according to Bloomberg. The counter has risen 0.8 per cent this year, compared to an 11 per cent advance in the benchmark Nifty 50. Castrol India has a total market capitalisation of ₹19,732.99 crore.

BP to sell a 65% stake in Castrol

BP, in a statement, said that it reached an agreement to sell a 65 per cent stake in Castrol for $10 billion to Stonepeak, and the total net proceeds to BP of $6 billion will be fully utilised to reduce net debt.

The transaction accelerates the delivery of BP’s reset strategy, will significantly strengthen its balance sheet, and advance its strategy to focus on the downstream, the statement said. "The transaction represents a significant milestone in bp’s commitment to accelerate its strategy, including simplifying the portfolio, strengthening the balance sheet, and focusing the downstream on its leading integrated businesses."

The implied total equity value of Castrol is $8.0 billion after deducting JV minority interests totalling $1.8 billion, and other debt-like obligations of around $0.3 billion, and subject to customary adjustments. Upon completion of the transaction, a new joint venture will be incorporated, comprising a 65 per cent Stonepeak and 35 per cent bp ownership. Following a two-year lock-up period, bp has the optionality to sell its 35 per cent stake in Castrol.

The transaction is expected to be completed by the end of 2026, subject to regulatory approvals.

"The sale marks an important milestone in the ongoing delivery of our reset strategy. We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan," Carol Howle, interim chief executive officer, said in a statement. "And we are doing so with increasing intensity – with a continued focus on growing cash flow and returns, and delivering value for our shareholders."

Castrol India September quarter results

The company reported 10 per cent growth in the Profit After Tax (PAT) at ₹228 crore in the September quarter over the same period a year ago. Revenue from operations grew 6 per cent for the September quarter to ₹1,363 crore as compared to ₹1,288 crore in the third quarter of 2024.