Oct 30, 2001|
RPL: The heat is on
The sluggishness in the Indian economy leading to a marked slowdown in refinery throughput seems to be reflected in the topline growth of Reliance Petroleum Ltd. (RPL). Despite the adverse industry conditions the company has been able to sustain operating rates much above industry averages.
|Operating Profit (EBDIT)
|Operating Profit Margin (%)
|Profit before Tax
|Profit after Tax/(Loss)
|Net profit margin (%)
|No. of Shares (eoy)
|Diluted Earnings per share*
The company has posted impressive growth in gross sales for first-half ended September '01. The largest greenfield refinery in the world, RPL, commenced operations at the start of fiscal '01. With stabilisation of operations the company has been able to achieve higher operating rates. Capacity utilisation, which was 86% in 1QFY01, has consistently ranged near 100% levels subsequently. This lead to a considerable rise in financials for 1QFY02, which is reflected in the half-yearly growth rates. The company achieved an operating rate of 107% in the concerned quarter.
Sales have grown in tandem with operating expenses, which has enabled the company to sustain operating margins. Raw material expenses have declined by 1.7% YoY, which has prevented an erosion in margins. The company could have benefited from the marginal decline in crude prices. However, for 1HFY02, raw material expenses continued to be higher by 23.5%. Operating profits were supported by increased volume sales. Also, the company had benefited from petrol (motor spirit) exports to the U.S leading to higher realisations.
In July '01, the outstanding equity shares of the company increased by 449 m on account of conversion of warrant equity shares. The warrants could have been attached with debentures, which are likely to have matured leading to lower interest burden. Outstanding shares at the end of FY01 were 4,753 m.
The extra-ordinary item is towards receipt of insurance claim of Rs 600 m towards loss in profits from business interruption arising from the Guajart earthquake. The company has been exempted from income-tax for a period of seven years. The tax provisioning is towards minimum alternative tax (MAT).
At Rs 29.4 the scrip is trading on a multiple of 8.8x 1HFY02 earnings. The valuations in the last six months have declined. The stock was trading at 16.5x FY01 earnings at start of the fiscal.
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