Chennai Petroleum Corporation Ltd. (CPCL)

Overview

Chennai Petroleum Corporation Limited (Formerly known as Madras Refineries Ltd. (MRL) is a Government of India Enterprise and group company of Indian Oil Corporation Ltd. (IOCL). It is one of the leading refinery designed to produce fuels and lube base stock with present capacity of 10.5 MMTPA. For an investor, it is one of the best stocks to buy in India.

The Fundamentals

At the time of writing this article on 04th August 2022, the company’s fundamentals are strong; especially after the declaration of Q1 FY22-23 results. Let’s elaborate the same.

Business Revenue

2018-19	2019-20	2020-21	2021-22	Q1 22-23
₹41,113 Crores	₹36,973 Crores	₹22,222 Crores	₹43,068 Crores	₹27,449 Crores

Profit & Loss

2018-19	2019-20	2020-21	2021-22	Q1 22-23
-₹213 Crores	-₹2,078 Crores	₹238 Crores	₹1,342 Crores	₹2,358 Crores

EPS, P/E and Sector P/E

	2018-19	2019-20	2020-21	2021-22	TTM
EPS	-₹14.33	₹-139.52	₹15.95	₹90.15	₹244.95
P/E					1.09

As you see from the above table, the Trailing Twelve Month (TTM) Earning Per Share (EPS) is ₹244.95 and the Price to Equity (P/E) ratio is 1.09 at the current price of ₹267/Share. So, one can consider that the stock is available at damn cheap price. Hence, the valuation is quite attractive.

Also, the Sector (or Industry) PE is more than 20. Therefore theoretical potential for stock price to go up could be 20 times than it’s existing price. But, keep in mind that it is just a theory and stock price may go up or down to any limit.

However, I do not advise any reader of this article to BUY, HOLD Or SELL the stock. Please take any action after the due diligence.

Shareholding Pattern and Pledged Shares

	March-2021	June-2021	Sep-2021	Dec-2021	March-2022	June-2022
Promoters	67.29%	67.29%	67.29%	67.29%	67.29%	67.29%
FII	0.71%	2.22%	1.33%	2.67%	3.37%	4.01%
DII	6.55%	7.18%	6.72%	5.85%	5.36%	2.67%
Public	25.45%	23.31%	24.66%	24.20%	23.98%	26.03%

As shown in the table above, the Promoters Holding is 67.29% which is considerably a high promoter holding. Since it is a subsidiary of IOCL, the majority stake is with IOCL. The public holding is around 25% as well as FIIs and DIIs are also holding this stock.

There is no holding is pledged.

Book Value and P/B Ratio

The book value per share is ₹221, hence the P/B ratio is just 1.20 With this kind of P/B Ratio, the stock is considered as preferable to make an investment.

Dividend and Dividend Yield

The overall consistency for paying dividend is not at par with other PSUs. The company paid Dividend of ₹21 in the year 2017, ₹18.5 in the year 2018 and NIL Dividend in the year 2019, 2020 and 2021. In the current year the company has declared a final dividend of ₹2/share for the FY 2021-2022.

As CPCL reported a bumper profit in April – June Quarter of 2022, the company may offer handsome dividend in future.

52 Week High and Low

Stock price varied between ₹94.45 and ₹417.85 during the past 52 Weeks. The stock is currently traded at 36% Lower than it’s 52W High and almost 2.82 times from it’s 52W Low.

Conclusion

For the last two consecutive quarters, the financials of the company are improving. If you consider certain fundamentals such as Shareholding, EPS, P/E, P/B, Dividend history etc., the stock is available at a lucrative price or say it’s undervalued stock. Since, no one can predict stock market movements, the share price may go in either directions. However, this stock has potential to earn profit if you remain invested for longer period.