Higher GRM boosts profitability
Chennai Petroleum Corporation Ltd. (CPCL) reported a sizeable growth in operating profit of 23% YoY and 47% QoQ, on the back of buoyancy in international refining margins and operating efficiencies, in spite of supply constrains. GRM of US$8.76/bbl for Q1FY08 is more than 30% higher than, US$6.64/bbl in Q1FY07 and US$6.42/bbl in Q4FY07. The stock is trading at EV/EBITDA of 4.3x and PER of 6x FY08E, a significant discount to its domestic and international peers. We believe global refining margin will remain buoyant due to tight demand-supply situation for petroleum products, which will eventually benefit the company. We recommend 'Accumulate' rating on the stock.
Chennai Petroleum Corporation Q1FY08 Result Update (Accumulate)
Chennai Petroleum Corporation Ltd. (CPCL) reported a sizeable growth in operating profit of 23% YoY and 47% QoQ, on the back of buoyancy in international refining margins and operating efficiencies, in spite of supply constrains. GRM of US$8.76/bbl for Q1FY08 is more than 30% higher than, US$6.64/bbl in Q1FY07 and US$6.42/bbl in Q4FY07. The stock is trading at EV/EBITDA of 4.3x and PER of 6x FY08E, a significant discount to its domestic and international peers. We believe global refining margin will remain buoyant due to tight demand-supply situation for petroleum products, which will eventually benefit the company. We recommend 'Accumulate' rating on the stock.
Chennai Petroleum Corporation Q1FY08 Result Update (Accumulate)
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