CHENNPETRO - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 2.0

🛢️ Fundamental Analysis

Chennai Petroleum shows signs of volatility and weak profitability, making it a risky candidate for long-term investment at current levels. Here's the breakdown

Metric Value Implication

Market Cap ₹10,496 Cr Mid-cap; cyclical and commodity-linked business

Stock P/E Not available Likely negative due to recent losses; valuation unclear

PEG Ratio Not available Cannot assess growth-adjusted valuation

ROCE / ROE 4.30% / 2.51% Very weak; poor capital efficiency and returns

Dividend Yield 0.71% Low; not attractive for income investors

Debt-to-Equity 0.38 Moderate; manageable but not ideal

EPS ₹-12.3 Negative; recent losses weigh on earnings

Qtr Profit Var -111% Severe decline; major earnings volatility

FII/DII Holding Change -1.80% / +0.24% FII exit; DII marginally increasing exposure

📉 Technical Analysis

Current Price: ₹705

DMA 50 / DMA 200: ₹699 / ₹676 → Trading slightly above both; neutral to mildly bullish

RSI: 46.4 → Neutral zone; no strong momentum

MACD: +11.7 → Bullish crossover; short-term strength

Volume: Well below average; weak conviction

💰 Valuation & Entry Zone

Due to lack of earnings visibility and recent losses, valuation is unreliable. However, for speculative positioning

Ideal Entry Zone: ₹600–₹650

This range offers technical support and better risk-reward if earnings recover

Avoid fresh entry above ₹700 unless profitability stabilizes.

📈 Long-Term Investment Outlook

Pros

Strategic importance in refining sector

Moderate debt levels

Technicals show short-term strength

Cons

Negative EPS and profit collapse

Weak ROE and ROCE

Unclear valuation (no P/E or PEG)

FII exit signals caution

Chennai Petroleum is not a strong long-term candidate unless earnings normalize and margins improve sustainably.

🏁 Exit Strategy / Holding Period

If you already hold this stock

Short-Term: Consider exiting near ₹750–₹780 if technical momentum continues

Medium-Term: Hold only if next 2 quarters show profit recovery

Long-Term: Exit fully if ROE stays below 5% and EPS remains negative

Reassess if price crosses ₹800 without earnings support or if losses persist.

Would you like a comparison with other refiners like MRPL or BPCL to evaluate sector alternatives?

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