December 13, 2016 / 16:08 IST
Chennai Petroleum Corporation Ltd (CPCL) is a subsidiary of Indian Oil Corporation (IOCL) with IOCL holding 51.89% stake in the firm as at December 2015. CPCL is largest refinery in south India with a total installed capacity of 11.5 MMTPA. The Company has two refineries located in Tamil Nadu – the first Manali Refinery at Chennai with a capacity of 10.5 MMTPA and the second Cauvery Basin Refinery at Cauvery Basin near Nagapattinam with a capacity of 1.0 MMTPA.
OutlookWe feel investors could “Buy” the stock at the CMP and add on dips to Rs 169-175 band (5.75x FY17E EV/EBITDA) for a sequential targets of Rs 223 (6.25x FY17E EV/EBITDA) and Rs 248 (6.5x FY 17E EV/EBITDA) in 1-2 quarters. At the CMP of Rs 189 the stock trades at 5.9x FY17E EV/EBITDA.
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