BP to Capitalize on India's Fuel Market With $1B Investment

Zacks Equity Research

BP plc BP announced the payment of $1 billion to Reliance Industries (“RIL”) for a 49% stake in Reliance BP Mobility Limited (“RBML”) – a joint venture (JV) with RIL holding the remaining 51%.

The transaction marked the completion of the initial agreement entered by the companies on Aug 6, 2019. With the investment, the British Energy giant will capitalize on fast-growing fuels and mobility markets of India to become a leading player in the country. BP said that it will now be able to leverage the wide customer networks of RIL in India through the Jio digital platform.   

BP says that through the next two decades, it expects India to be the world’s fastest-growing fuel market. The integrated energy major added that India will likely see its number of passenger cars increase six-fold over the period. Thus, in order to keep pace with the mounting fuel demand, the JV is planning to boost the number of fuel retailing stations to 5,500 from 1,400 over the next five years.

BP also plans to invest in India's green energy fund. On Jul 7, the company announced plans to invest $70 million in Green Growth Equity Fund (GGEF) of India. The fund, being promoted by the India’s National Investment and Infrastructure Fund (NIIF) and the government of U.K., was established in 2018.

Notably, after the completion of the investment, India’s GGEF will be more focused to scale up growth in zero carbon and low carbon energy solutions in the nation. Importantly, the investment is not only going to aid India in significantly lowering greenhouse gas emissions but will also create a platform for the British energy major to invest alongside GGEF in many low-carbon projects in the country that are commercially viable. The investment will also make BP a limited partner in GGEF and enable the company to represent on the advisory committee.

The fund, comprising investments from the governments of India and the U.K., has a target to reach of roughly $700 million in investment commitments. Overall, with the investment strategy, BP is not only committed to reimagining energy for India but will also advance to become a net zero emission company by 2050 or sooner.

BP is not the only company investing in non-oil businesses like renewable energy to align goals with the Paris Climate Agreement. Royal Dutch Shell plc RDS.A is another key energy firm planning to become a net zero emission energy firm by 2050. Eni SpA E is also committed to renewables for a cleaner future.

BP p.l.c. Price

BP p.l.c. Price

BP p.l.c. price | BP p.l.c. Quote

BP currently carries a Zacks Rank #3 (Hold). Meanwhile, a better-ranked player in the energy space is Murphy USA Inc. MUSA. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Murphy USA is likely to see earnings growth of 7% in the next five years.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Eni SpA (E) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting.