Robust refining margins help Essar Oil post Q1 profits

Moneycontrol Bureau

Ruias-owned Essar Oil posted a net profit of Rs 469 crore year-on-year (YoY) in-line with market expectations on robust refining margins.
The company had posted a net loss of Rs 70 crore in the corresponding quarter of FY11 on the back of depressed refining margins. The gross refining margins for the quarter stood at USD 7.38 a barrel, a growth of 27% YoY.
The quarterly EBITDA was at Rs 913 crore, a growth of 124% from Rs 407 crore in the corresponding quarter of last fiscal year.
Analysts anticipated the company posting good numbers primarily on the increased production capacity.
The stock reacted positively during market hours on the BSE, however, gave up most its gains to close the day at Rs 127.55, down 1.09%
Essar's Vadinar Refinery in Gujarat achieved quarterly throughput of 3.62 MMT (million metric tonnes), signifying over 135% capacity utilization.  Phase I expansion project, which will increase the refining capacity from 14 MMTPA to 18 MMTPA and complexity from 6.1 to 11.8, is 92% completed.
However, Essar Oil will shut its 280,000 barrels per day (bpd) Vadinar refinery from September 18 for 35 days, a company statement said. Credit Suisse upgrades Essar Oil to outperform
Kalpesh Gohel of AK Stockmart has advised buying rating on the stock. "Investor should buy Essar Oil with a stop loss of Rs 128. The stock can touch Rs 141-142 in future," he said. More on the company & stock
Essar Oil is engaged in the exploration and production of oil & gas, refining of crude oil, and marketing of petroleum products.
The company's trailing 12-month (TTM) EPS was at Rs 4.79 per share. (Mar, 2011). The stock's price-to-earnings (P/E) ratio was 27.46. The latest book value of the company is Rs 31.65 per share.
At current value, the price-to-book value of the company was 4.16.
The company's gross revenues grew 37% to Rs 16,478 crore from Rs 12,048 crore in Q1 FY11.