2. Chennai Petroleum Corp
Chennai Petro (CPCL) is the only refinery in South India. It has two units. The company's product range includes fuels such as diesel, superior kerosene, liquefied petroleum gas, aviation turbine fuel, petrochemicals feedstock, naphtha, hexane, bitumen, paraffin wax and lube base stocks.
The company started its operations with a refining capacity of 2.5 million tonnes per annum (tpa), which has now increased to 10.5 million tpa. By March 2009, it plans to spend Rs 284 crore (Rs 2.84 billion) to add another 1.7 million tpa to its refining capacity. This, along with 1 million tpa capacity of its Cavery Basin refinery, will take its total annual refining capacity to around 12.2 million tonnes.
This small (compared to, say, Indian Oil, which has a capacity of 60.2 million tpa) but nimble player has one of the highest net margins in the industry at 3.22 per cent in the December 2007-08 quarter compared to Bharat Petroleum's 1.08 per cent and Hindustan Petroleum's negative net margin of -0.6 per cent.
The stock has consistently outperformed the markets, with its one year ending 31 March 2008 returns at 48.82 per cent compared to the 19.67 per cent that the Sensex returned over the same period.
The stock price has fallen from Rs 380 in early January to Rs 250 in March. It currently trades at 4.30 times earnings and 1.22 times book value. The only caveat is that oil is a business tightly controlled by the government. That risk remains.
Image: A view of an oil refinery. Scott Barbour/Getty Images
Also read: Seven gems worth investing in
Advertisement
