Essar Oil - Superior operations achieved; deleveraging awaited - Edelweiss

Essar Oil (ESOIL) reported Q3FY13 profit of INR320mn, lower than our INR1030mn estimate due to higher interest cost and forex losses. However, operationally the performance was superior. This was the first quarter reflecting full benefits of the expanded complex refinery.

While the refinery operated at 102.8% utilisation (5.14 mmt), clean GRMs rose to USD9.75/bbl reflecting the rise in complexity to 11.8. ESOIL used 84% heavy and ultra-heavy crude and produced 85% light and middle distillates. Going forward, reduction in debt and lower financing costs via raising ECB will be key.

Maintain 'BUY' with a target price of INR101.

Source : Equity Bulls

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