Thursday, July 24, 2008

Stock Idea: Chennai Petroleum Corporation

Chennai Petroleum Corporation, as expected, has posted very good results for first quarter ended 30-06-08. Though the topline growth was good, profit growth was spectacular.
Its net sales rose 34% at Rs.11,253.20 crore. Its operating expenses rose 31%. EBIDTA showed a 82% jump at Rs.1,179 crore. Other expenditure included exchange fluctuation loss of Rs.198 crore million for the quarter. Its PBT consequently shot up by a whopping 104% at Rs.373.85 crore. Tax outgo was up 104%, yet it managed to show a spectacular 104% jump in PAT at Rs.703.27. crore.
Gross Refining Margin for the quarter was $ 15.89 / bbl as compared to $ 8.76 / bbl during the corresponding quarter of the previous year and $ 8.47 / bbl for the previous financial year.
The company posted its historically highest profit margins. OPM was at 10.48% and NPM at 6.25%.
The company, a subsidiary of Indian Oil Corporation (IOC), supplies its entire production to IOC at prices which it would pay to an international supplier. Hence, the biggest advantage which the company has is that its entire production is already booked but at existing international oil prices. It is not shackled under the Govt’s pricing. So it enjoys international rates, keeps its costs same and thus manages to reap a bounty.
The company is putting up another hydro diesel desulphurization unit at its Cauvery basin refinery. This would help the company overcome the problem of feedstock availability and expand its crude product line.
Currently quoted at Rs. 295, if you have the stock, hold on, it could prove to be a goldmine.


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