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Reliance Petro: Maiden year performance - Views on News from Equitymaster
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  • Apr 30, 2001

    Reliance Petro: Maiden year performance

    Reliance Petroleum Ltd. (RPL) has declared its maiden annual results. Therefore, YoY comparisons are not possible. Strong execution skills have enabled the company to achieve rated capacity utilisation in the first year of operations. The turnover has weakened compared to the previous two quarters. This could be due to the plant shutdowns post Gujarat earthquake.

    (Rs m) 3QFY01 4QFY01 Change FY01
    Sales 91,490 75,060 -18.0% 309,630
    Other Income 710 660 -7.0% 2,200
    Expenditure 83,360 66,610 -20.1% 278,450
    Operating Profit (EBDIT) 8,130 8,450 3.9% 31,180
    Operating Profit Margin (%) 8.9% 11.3%   10.1%
    Interest 2,710 3,050 12.5% 10,320
    Depreciation 1,720 1,920 11.6% 6,610
    Profit before Tax 4,410 4,140 -6.1% 16,450
    Extraordinary items - -   (640)
    Tax - 1,170   1,170
    Profit after Tax/(Loss) 4,410 2,970 -32.7% 14,640
    Net profit margin (%) 4.8% 4.0%   4.7%
    No. of Shares (eoy) 4,749 4,749   4,749
    Earnings per share* 3.7 2.5   3.1
    P/E Ratio   20.3   16.5

    The high complexity of the refinery could have enabled the company to produce a superior product mix. Consequently, the company has been able to penetrate the quality stringent Western markets with diesel exports. The operating margins of the company (10.1%) are significantly higher than its PSU peers, which have margins in the 3%-4% range. Oil prices have cooled down in the last quarter of FY01 by 23% from their high in 3QFY01. Consequently, QoQ the OPM has increased by 240 basis points.

    The extraordinary items refers to the revenue loss, start up costs and higher working capital costs consequent to the earthquake in Gujarat. The company has filed for an insurance claim for the same amount. Further adjustments will be made in the year the claim is settled.

    The RPL stock is trading at Rs 51 on a multiple of 20.3x 4QFY01 annualised earnings. RPL 's P/E is significantly higher than its peer group, which is trading on an average multiple of 5x. On full year earnings the company trades on a multiple of 16.5x.



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