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Reliance Petroleum: Meets its target - Views on News from Equitymaster
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  • Oct 30, 2000

    Reliance Petroleum: Meets its target

    Reliance Petroleum Ltd. (RPL) has declared its maiden half yearly results. Therefore, no YoY comparison is possible. Impeccable project execution has enabled it to achieve rated capacity utilisation in double quick time. RPL has successfully tapped the export markets due to its superior product quality. Exports amounted to Rs 21.4 bn (15% of sales). The company processed 12.6 m tonnes of crude for 1HFY01.

    (Rs m) 1QFY01 2QFY01 1HFY01
    Sales 59,830 83,250 143,080
    Other Income 130 700 830
    Expenditure 53,650 75,470 129,120
    Operating Profit (EBDIT) 6,180 7,780 13,960
    Operating Profit Margin (%) 10.3% 9.3% 9.8%
    Interest 1,720 2,840 4,560
    Depreciation 1,350 1,620 2,970
    Profit before Tax 3,240 4,020 7,260
    Tax - - -
    Profit after Tax/(Loss) 3,240 4,020 7,260
    Net profit margin (%) 5.4% 4.8% 5.1%
    No. of Shares (eoy) 4,300 4,300 4,300
    Earnings per share* 3 4 3
    P/E Ratio   15.0 16.6

    RPL is well on track to achieve its maiden year targets. Reliance captively consumes 30% of RPL's production. The company plans to enter marketing of controlled products once the sector is thrown open. It has also set up an oil trading desk for hedging crude oil prices. This will help in reducing price risk.

    The company has reported a healthy OPM of 9.3%, which is significantly larger than the margins earned by its Indian peer group. This has been made possible due to the high complexity of the refinery, which indicates greater secondary processing capacity. This enables the refinery to produce a larger proportion of high value added products. However, QoQ the margins have declined by 100 basis points.

    The RPL stock is trading at Rs 56 on a multiple of 15 on 2QFY01 annualised earnings. RPL 's P/E is significantly higher than its peer group, which is trading on an average multiple of 4.



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