Shares of Chennai Petroleum Corporation fell as much as 15.50% in Thursday's intra-day trade after it reported a 98.81% sequential decline in standalone net profit at ₹27.9 crore for the September ending quarter. The company made a net profit of ₹2,358.8 crore in the first quarter of FY23 and ₹65.5 crore in the second quarter of FY22.
During Thursday's trade, the stock opened with a gap down of ₹34.30 at ₹200 and dropped further to hit an intraday low of ₹198.20, but later the stock recovered marginally and it is currently trading at around ₹207, down by 11.45% on the BSE at 01:00 p.m.
The government of India on July 01 levied duties on the export of petroleum products at the rates notified on a fortnightly basis, which have been reduced in the refinery transfer pricing. This has resulted in lower revenue and profitability for the quarter, the company said in a BSE filing.
Revenues increased 120% YoY to ₹19,520.8 crore in the September quarter but were down 28% sequentially. The company's total expenditure jumped 125.48% to ₹19,281.3 crore as against ₹8,551.1 crore in the corresponding quarter of the last fiscal. The EBITDA margin dropped to 1.17% in Q2FY23 from 3.45% in Q2FY22, a decline of nearly 228 basis points.
The average gross refining margin for the second quarter stood at $14.58 per bbl as against $4.44 per bbl in the same quarter of the last fiscal.
While on the expenditure side, the company incurs an exchange loss of ₹175.22 crore for the September quarter and an exchange loss of ₹457.53 crore in H1.
On the financial ratio front, the debt-to-equity ratio of the company improved to 1.45x in the first six months of the current fiscal as against 7.14x during the same period of the last fiscal. As a result, the debt service coverage ratio saw a sharp improvement in H1 from 2.60x to 6.37x YoY. The interest coverage also improved, to 26.41x from 6.69x.
Meanwhile, on August 23, Chennai Petroleum Corp said it has formed a joint venture with its parent company, Indian Oil Corp, and others to build a 9 MMTPA refinery at a cost of 315.80 billion rupees in southern Tamil Nadu state, Reuters reported.
According to the report, CPCL, in which the National Iranian Oil Company owns about 15%, operates a small refinery in the Cauvery Basin at Nagapattinam, where the new plant will be built.
CPCL will hold a 25% stake in the new refinery for an investment of 25.70 billion rupees, while IOC and other seed equity investors, including Axis Bank, HDFC Life Insurance ICICI Bank ICICI Prudential Life Insurance, and SBI Life Insurance will hold the rest.
On the stock performance side, over the last three months, the stock lost almost 26% of its value. After reaching a 52-week high of ₹417 on June 8, 2022, the stock began to fall, and within a month it had dropped 36%. To date, the stock has corrected by nearly 50.32% from its one-year high.
Chennai Petroleum Corporation Limited (CPCL) refines crude oil to produce and supply various petroleum products, as well as manufacture and sell lubricating oil additives. Indian Oil Corporation Limited, the holding company, markets a majority of the fuel products produced by CPCL.
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