The privatization process is gradually transforming the business arena. As a part of the privatization process the acquisition cost of BPCL is expected to range between $6.9 billion to $10.3 billion.

According to Credit Suisse, the investment required by the acquirer could fall between $6.9 billion to $10.3 billion.

In a statement, Credit Suisse, "We expect the reserve price to be approximately Rs 500 per share, and post dividend (Rs.50-60/share), the government's stake is worth $6.9 billion. Post the open offer, the maximum outflow would be $10.3 billion."

Furthermore, it is also said that the buyer could halve the capex at BPCL and sell non-core assets for a tune of $4 billion. Among the bidders, Apollo Global has done a deal of this size while Vedanta has partnered with Centricus.

Also, the steady-state EBITDA for BPCL is approximated to range from $2 billion to $2.5 billion. While, the higher end of range is possible when the potential acquirer is able to reduce refining costs, increase productivity of marketing outlets, and increase non-fuel revenues.

Moreover, the macro is also improving for the refining sector, with inventories now down for both gasoline and diesel, and the cracks have began to improve.

The note from the investment banking company states that there is vast scope to vastboost steady-state EBITDA by $450 million.
It adds, "In our view, refining cost reduction can boost EBITDA by $150 millionn, higher non-fuel EBITDA at marketing outlets can add $100 million, and higher footfalls can add $200 million."

The BPCL initiated the project Nishchay in the financial year 2016 to promote non-fuel revenues, but it gave up on most of the initiatives in two to three years. Even the latest app "SmartDrive" for customers does not have real-time data at the outlets, and thus the active users are few.

Credit Suisse says, "We show that globally retail outlets have a substantial contribution from non-fuel revenues. The 7-Eleven acquired Speedway outlets in the US for $21 billion where half of the gross profit was driven by merchandise sales."