X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Chennai Petro: Takes a beating - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 26, 2002

    Chennai Petro: Takes a beating

    The south India based pure refinery, Chennai Petroleum Corporation Ltd. (CPCL), which was acquired by Indian Oil (IOC) towards the end of the previous fiscal, continues to experience a difficult market environment. Sales of the company have declined in all the three quarters of the fiscal.

    (Rs m) 3QFY01 3QFY02 Change 9mFY01 9mFY02 Change
    Net sales 19,483 15,571 -20.1% 51,020 45,405 -11.0%
    Other Income 110 60 -45.8% 157 150 -4.3%
    Expenditure 18,155 14,720 -18.9% 48,212 44,004 -8.7%
    Operating Profit (EBDIT) 1,328 851 -35.9% 2,808 1,401 -50.1%
    Operating Profit Margin (%) 6.8% 5.5%   5.5% 3.1%  
    Interest 360 313 -13.3% 996 945 -5.1%
    Depreciation 224 249 10.8% 765 745 -2.6%
    Profit before Tax 853 349 -59.0% 1,205 (139)  
    Tax 256 -   361 19 -94.7%
    Profit after Tax/(Loss) 597 349 -41.5% 843 (158)  
    Net profit margin (%) 3.1% 2.2%   1.7% -0.3%  
    No. of Shares 149.0 149.0   149.0 149.0  
    Diluted earnings per share* 16.0 9.4   7.5 (1.4)  
    P/E Ratio   3.5        
    (*annualised)            

    The situation on the topline does not seem to be improving. In fact, it has deteriorated for the quarter ended December '01. Sales for the quarter have fallen by 20%, as compared to a 5% slide in the first two quarters. The performance, though, is in line with peer performance. The lower sales are due to poor offtake of petroleum products. Diesel and kerosene, which are the largest constituents in petroleum demand, registered negative growth in consumption. Also, petroleum product prices came under pressure during the third quarter, which impacted realisations. The lower net sales is also due to higher effective excise duty.

    While topline declined, operating profits of the company have bounced back. In 2QFY02, the company had reported an operating loss. Operating margins for the December '01 quarter are the highest in the current fiscal. With crude oil prices declining by an estimated 28% YoY, the company is likely to have received some breathing space. Raw material costs are down by 17% and 10% for the quarter and 9 months ended December '01. The lower costs are also due to reduced throughput. During the quarter, gross refining margins are likely to be under pressure, as petroleum product prices have declined at a faster clip compared to crude oil.

    With the IOC merger, working capital cycle could have tightened leading to lower short-term borrowings. Interest expense has declined for the past two quarters. Lower depreciation for the year is due to the jump in depreciation charges in the previous fiscal. Most refining companies set up their diesel hydro-desulphurisation plant over FY00 resulting in a higher charge during FY01.

    At Rs 33 the scrip is trading on a multiple of 3.5x 3QFY02 annualised earnings. Over the past few weeks, the scrip has been shooting up. With BPCL announcing informal talks to merge its subsidiary, Kochi Refineries Ltd. (KRL), IOC too is contemplating merging its subsidiaries CPCL and Bongaigaon Refinery & Petrochemicals Ltd. (BRPL). The book value of CPCL at end of FY01 was Rs 83 per share. The significant discount to book value has triggered buying, as the merger ratio is likely to be in favour of CPCL. BRPL has a book value of Rs 28.

     

     

    Equitymaster requests your view! Post a comment on "Chennai Petro: Takes a beating". Click here!

      
     

    More Views on News

    GAIL: A Good Show (Quarterly Results Update - Detailed)

    Mar 27, 2017

    GAIL (India) Ltd has announced results for the quarter ended December 2016. reported 9.4% year on year (YoY) decline in sales, while bottom-line grew 45.4% YoY.

    ONGC: Higher Realisations on Crude Support Performance (Quarterly Results Update - Detailed)

    Mar 17, 2017

    ONGC has announced results for the quarter ended December 2016. The company has reported 9.2 % year on year (YoY) growth in sales, while bottom-line grew 197% YoY.

    Mahanagar Gas Ltd (IPO)

    Jun 21, 2016

    Should one subscribe to Mahanagar Gas IPO?

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    TRACK KOCHI REFINERIES

    • Track your investment in KOCHI REFINERIES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MARKET STATS