Result Update: Chennai Petroleum Corporation Ltd - ACCUMULATE - TP Rs.495 - Kotak

Chennai petroleum has reported better than expected performance. CPCL's Q3FY18 PAT increased significantly by 22% qoq to Rs.3.87 bn (+33% yoy) reflecting significantly higher refining margins, higher sales volume and higher other income. CPCL has reported higher throughput of 2.74 mmt (4% qoq), resulting in 91% capacity utilization in Q3FY18. The company has reported higher GRMs of US$6.64/bbls in 9MFY18 v/s US$5.81 /bbls in 9MFY17.

We are introducing FY20 earnings estimates and roll-forward our valuation based on FY20E earnings. We expect CPCL to report an EPS of Rs.68.1/share in FY18E, an EPS of Rs.70.4 in FY19E and an EPS of Rs.83 in FY20E supported by higher refining margins, higher other income and higher crude throughput. At CMP, we believe that the stock is fairly valued at a PE of 5.4x FY20E earnings. Due to limited upside, we maintain ACCUMULATE on the stock with a revised price target of Rs.495. We have valued CPCL based on PE multiple of 6x FY20 (target PE), which is at a significant discount to its peers

Shares of CHENNAI PETROLEUM CORPORATION LTD. was last trading in BSE at Rs.420.95 as compared to the previous close of Rs. 429. The total number of shares traded during the day was 41207 in over 725 trades.

The stock hit an intraday high of Rs. 432.05 and intraday low of 417. The net turnover during the day was Rs. 17542408.

Source : Equity Bulls

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