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.
IPCL pales vis-a-vis Reliance - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 22, 2000

    IPCL pales vis-a-vis Reliance

    The stocks of the two major petrochemical companies have performed in complete divergent ways. While Reliance Industries has steadily gained, Indian Petrochemicals has been battered by the bourses.

    At the beginning of FY00, RIL was trading at a P/E multiple of 10 on FY99 earnings while IPCL was trading at multiple of 120. IPCL enjoyed such a large multiple, despite reporting poor results, due to the expected disinvestment.


    At the start of FY00 there was news of due diligence being conducted and only the bidding process remained. Consequently, the market was awaitng Government disinvestment from IPCL at an expected price of Rs 120. Therefore the stock ruled at such high levels.

    With the Government vacillating on the process the market has re-rated the stock on fundamentals and is sceptical to take a call on Government action. As a result the stock has declined to Rs 58 and is trading at a multiple of 10.2 on 1QFY01 annualised earnings.

    On the other hand, RIL at the start of FY00 was trading at a multiple of 10 on FY99 earnings. For FY00 it reported a an EPS growth of 40%, which percolated to the stock price. It has continued on the growth path by reporting a 20% increase in EPS and trades at a multiple of 14 on 1QFY01 annualised earnings.

    Over the past few months Reliance has announced plans to enter into a number of emerging sectors. These initiatives should help the company sustain their growth rate. For FY01, the company also plans to consolidate its balance sheet with that of Bombay Surburban Electricity Supply (BSES) and Reliance Petroleum (RPL) on equity accounting basis. This should see the bottomline grow by approximately Rs 7.5 bn.

    With the disinvestments factored out and if IPCL can pull up its socks we can expect the stocks to show some similarity in movement.



    Equitymaster requests your view! Post a comment on "IPCL pales vis-a-vis Reliance". Click here!


    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    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.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    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


    Aug 21, 2017 (Close)


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


    Compare Company With Charts