CHENNPETRO - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | CHENNPETRO | Market Cap | 12,394 Cr. | Current Price | 833 ₹ | High / Low | 1,103 ₹ |
| Stock P/E | 5.87 | Book Value | 574 ₹ | Dividend Yield | 0.60 % | ROCE | 4.04 % |
| ROE | 2.10 % | Face Value | 10.0 ₹ | DMA 50 | 858 ₹ | DMA 200 | 793 ₹ |
| Chg in FII Hold | 4.07 % | Chg in DII Hold | -1.58 % | PAT Qtr | 987 Cr. | PAT Prev Qtr | 732 Cr. |
| RSI | 46.7 | MACD | -4.34 | Volume | 6,36,647 | Avg Vol 1Wk | 21,89,608 |
| Low price | 433 ₹ | High price | 1,103 ₹ | PEG Ratio | -0.12 | Debt to equity | 0.23 |
| 52w Index | 59.6 % | Qtr Profit Var | 9,338 % | EPS | 142 ₹ | Industry PE | 9.25 |
📊 Financials: Chennai Petroleum Corporation Ltd. has reported strong quarterly PAT growth (987 Cr vs 732 Cr), reflecting a massive 9,338% profit variation year-on-year. However, ROE at 2.10% and ROCE at 4.04% remain weak, indicating poor efficiency in capital utilization. Debt-to-equity ratio of 0.23 shows low leverage, which is positive. EPS of 142 ₹ supports earnings visibility, though profitability is cyclical given the nature of the refining business.
💹 Valuation: Current P/E of 5.87 is well below the industry average (9.25), suggesting undervaluation. P/B ratio ~1.45 (Price 833 ₹ / Book Value 574 ₹) is reasonable. PEG ratio of -0.12 indicates weak growth prospects relative to valuation. Dividend yield of 0.60% provides limited income support. Intrinsic value appears higher than current price, but efficiency metrics remain a concern.
🏢 Business Model: Chennai Petroleum operates in the refining sector, processing crude oil into petroleum products. Competitive advantage lies in scale, government backing, and integration within the Indian Oil ecosystem. However, profitability is highly dependent on crude oil prices, refining margins, and global demand cycles.
📈 Entry Zone: Attractive accumulation zone between 800–820 ₹, close to DMA200 (793 ₹). RSI at 46.7 indicates neutral momentum, while MACD (-4.34) suggests mild bearishness. Long-term investors can accumulate cautiously near support levels.
🔒 Holding Guidance: Fundamentally undervalued with strong earnings momentum, but weak ROE/ROCE highlight efficiency concerns. Suitable for long-term holding only for investors comfortable with cyclical risks in the refining sector.
Positive
- Massive quarterly profit growth (9,338% YoY).
- Low debt-to-equity ratio (0.23) ensures financial stability.
- P/E (5.87) below industry average (9.25), indicating undervaluation.
- EPS of 142 ₹ supports earnings visibility.
- FII holdings increased (+4.07%), reflecting foreign confidence.
Limitation
- Weak ROE (2.10%) and ROCE (4.04%) highlight poor efficiency.
- Dividend yield of 0.60% offers limited income support.
- PEG ratio (-0.12) indicates weak growth prospects.
- DII holdings decreased (-1.58%), showing cautious domestic sentiment.
Company Negative News
- No major negative news reported, but efficiency metrics remain weak and profitability is cyclical.
Company Positive News
- Strong quarterly profit growth with significant earnings momentum.
- Low leverage enhances financial resilience.
- FII participation increased, reflecting foreign investor confidence.
Industry
- Refining sector benefits from rising energy demand and government support.
- Industry P/E at 9.25 suggests moderate optimism.
- Global crude oil price volatility impacts margins and profitability.
Conclusion
✅ Chennai Petroleum Corporation Ltd. is undervalued relative to peers and has shown strong profit growth. However, weak ROE/ROCE and cyclical risks limit efficiency. Long-term investors may accumulate near 800–820 ₹ for margin of safety, while monitoring crude oil price trends and refining margins.
I can also extend this with a peer comparison against BPCL, HPCL, and IOCL to highlight relative valuation and efficiency. Would you like me to add that?