Dividend Of Rs 24 Per Share, Robust Margin, Buy This Oil Stock, Says Anand Rathi

Broking firm, Anand Rathi has recommended buying the stock of oil refiner, Chennai Petroleum. The brokerage has revised its target price higher to Rs 355 per share. For the pure-play refining Chennai Petro, the high refining-margin context and robust demand would support de-levering to add share-holder wealth, the brokerage has noted.

"The FY23 performance was strong with Rs56bn/Rs35bn/ Rs57.5bn EBITDA/PAT/OCF. The GRM was $11.9/bbl; debt reduced a steep Rs50bn from the year prior to Rs42.1bn. Dividend was higher at Rs 27 (11.4% pay-out, ~9% of Mcap). On the huge increase in net worth, we maintain a Buy rating with a revised 12-month target price of Rs 392 (Rs 355 earlier)," Anand Rathi has said in a report.

Strong core refining performance; supernormal profits, higher dividend

Q4 FY23 EBITDA/PAT were up 2.9%/1% y/y, 277%/603% q/q, to Rs16.3bn/Rs10bn. The GRM was $12.5/bbl ($5.7 the quarter prior, $14.2 a year ago) while the Arab heavy-light difference was $4.1/bbl ($3.75 the prior quarter). The core GRM at $13.5/bbl ($9.7 the previous quarter, $8.9 a year ago) was at a $5.2 premium to the benchmark $8.3. GRMs were boosted by strong cracks for major products: gasoil $25.4/bbl, ATF $26.9, gasoline $14.7, and by crude discounts from Russia and possibly Iraqi crude. Inventory loss was $1/bbl (Rs1.8bn).

The stock of Chennai Petroleum was last seen trading at Rs 296 on the Bombay Stock Exchange.

Disclaimer

The stocks have been picked from the brokerage report of Prabhudas Lilladher, which highlights technical aspects. Greynium Information Technologies Pvt Ltd and the author are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision. The above article should not be construed as a buy recommendation from our end, as we have just provided information based on the brokerage report.