Chennai Petroleum Corporation - March 2013 Results Preview - Motilal Oswal

- We expect CPCL to report 4QFY13E PAT of INR4.6b v/s INR1.1b in 4QFY12 and loss of INR4.6b in 3QFY13.

- EBITDA is expected to be INR5.9b, against a loss of INR2.5b in 3QFY13 mainly due to higher throughput at 3.1 mmt, against 2.6 during 3QFY13. Regional benchmark Reuters Singapore GRM is up 37% QoQ to USD8.7/bbl, from USD6.5/bbl.

- Medium term GRM outlook continues to be subdued due to over capacity and sluggish global demand. Expect GRM to be volatile (in spurts) due to occasional bunching up of shutdowns.

- For CPCL, we model a GRM of USD2.7/bbl for FY13E and USD6/bbl for FY14E. The stock trades at FY14E P/E of 4.1x and EV/EBITDA of 4.8x. Maintain Buy.

Source : Equity Bulls

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