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Buy Chennai Petroleum, target of Rs 175: Reliance Money
Reliance Money has upgraded its rating on Chennai Petroleum Corporation from hold to buy with a target price of Rs 175. Although the outlook on refining margins is not great, still at current levels, stock is extremely cheap.
Reliance Money has upgraded its rating on Chennai Petroleum Corporation from hold to buy with a target price of Rs 175 in its October 23, 2008 research report. "As expected, Chennai Petroleum has posted disappointing Q2 FY09 results, thanks to lower Gross Refining Margins, huge inventory losses, and one month maintenance shut down during the last quarter. Although the outlook on refining margins is not great, still at current levels, stock is extremely cheap."
"The company also has a strong track record of declaring dividends, and the average dividend yield for the past 15 years is at around 6%, giving a good support to stock price on the downside. Keeping in view the fact that CPCL is the cheapest refinery stock available coupled with attractive dividend track record, we upgrade the stock from HOLD to BUY with a target price of Rs 175 based on 3x FY10 EV/EBITDA multiple," says Reliance Money's research report.
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To read the full report click on the attachment......
