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  • ChennaiPetroSnapshot7 Aug 09

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    Sunil Kajaria
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    CPCL is a South India-based oil refining company with two refineries having a total capacity of 10.5 million metric tonnes per annum. It is majority owned by Indian Oil Corporation. In the recent past, CPCL reported losses for fiscal year 2009 due to a crash in crude oil prices that resulted in large inventory losses. However, analysts project strong performance in fiscal year 2010 with rising crude prices and improved operational efficiencies. The stock currently trades at an attractive valuation of 2 times its projected earnings for fiscal year 2010 and provides an opportunity for capital appreciation over the next year according to the analyst.

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    One page Equity Research Report on Chennai Petroleum Corporation Ltd.

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    CPCL is a South India-based oil refining company with two refineries having a total capacity of 10.5 million metric tonnes per annum. It is majority owned by Indian Oil Corporation. In the recent past, CPCL reported losses for fiscal year 2009 due to a crash in crude oil prices that resulted in large inventory losses. However, analysts project strong performance in fiscal year 2010 with rising crude prices and improved operational efficiencies. The stock currently trades at an attractive valuation of 2 times its projected earnings for fiscal year 2010 and provides an opportunity for capital appreciation over the next year according to the analyst.

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    8 views1 page

    ChennaiPetroSnapshot7 Aug 09

    Uploaded by

    Sunil Kajaria
    CPCL is a South India-based oil refining company with two refineries having a total capacity of 10.5 million metric tonnes per annum. It is majority owned by Indian Oil Corporation. In the recent past, CPCL reported losses for fiscal year 2009 due to a crash in crude oil prices that resulted in large inventory losses. However, analysts project strong performance in fiscal year 2010 with rising crude prices and improved operational efficiencies. The stock currently trades at an attractive valuation of 2 times its projected earnings for fiscal year 2010 and provides an opportunity for capital appreciation over the next year according to the analyst.

    Copyright:

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    Download as PDF, TXT or read online from Scribd
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    of 1

    Sunil K. Kajaria CHENNAI PETROLEUM CORPORATION LTD. (www.cpcl.co.

    in)
    98300-47514
    sunilkajaria@vsnl.net

    PER SHARE DATA Promoters & Management : CPCL is a South based refinery with 10.5 mtpa capacity. It is a 51.88%
    CMP 6-Aug-09 180.80 Face Value 10 subsidiary of Indian Oil Corp with National Oil Co. of Iran holding a 15.40% stake. The Co. operates two
    Projected EPS (FY10) 91.00 Equity (Crs) 149 refineries - Manali (9.5 mtpa) & Cauvery Basin (1 mtpa). Manali has one of the most complex refineries
    Last FY EPS (26.68) M. Cap(Crs) 2694 with Fuel, Lube, Wax & petrochemical feedstock facilities.
    Forward P/E 1.99 Dividend 0%

    KEY FINANCIAL DATA FY10(P) FY09(A) FY08(A) QUARTERLY DATA: Q3FY10(9) Q3FY09(9) H1FY10(6) H1FY09(6) Q1FY10(3) Q1FY09(3)
    Sales (Crs) 25508 31964 28019 Sales 19076 27154 12879 21536 5660 11253
    EBITDA 2599 (112) 2168 EBITDA 1938 (638) 1322 1142 557 1179
    PBT 2061 (593) 1722 PBT 1575 (1011) 1075 915 462 1077
    PAT 1356 (397) 1123 PAT 1034 (669) 708 601 305 703
    OPM(%) 10.19% -0.35% 7.74% OPM(%) 10.16% -2.35% 10.27% 5.30% 9.84% 10.48%
    NPM(%) 5.32% -1.24% 4.01% NPM(%) 5.42% -2.46% 5.50% 2.79% 5.39% 6.25%
    FINANCIAL ANALYSIS:
    1) Attractive Valuation of 2 X Forward PE (FY10) and U.S $ 53.45 / tonne of refining capacity
    2) GRMs for Q1FY10 were at $ 6.8 /bbl and this parameter is expected to remain at these levels for the rest of the year
    3) FY09 was "Annus Horribilis' for the company. In Q3FY09 when crude prices crashed, the company lost 1926 Crs due to inventory losses incurred
    4) CPCL continues to enjoy A1+ rating from ICRA for its CP/ Short-Term NCD programme (Highest Quality rating)
    INVESTMENT THESIS
    1) Good visibility for FY10 with crude prices on upward trajectory. CPCL expected to benefit from increased use of heavier crude as well as operational efficiency gains
    2) Merger with IOC is a possibility & would be a negative for the stock. However, National Iran Oil has indicated that it prefers CPCL to remain standalone
    3) Risk remains that Govt. will re-tinker with petrol/deisel subsidy sharing mechanim if crude shoots up again
    4) Expect Stock to outperform in the coming year. Valuation on replacement basis will provide support. BUY with a 1-yr target price of 300

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