Well, the reasons are simple… …
Chennai Petroleum released strong financial results on April 28, 2022.
Adding fuel to the flame, ace investor Dolly Khanna bought 1 million shares via an open market buy on the NSE on Thursday, April 28, 2022. This gives her a stake value of almost 0.7%. ₹263 m crossing.
According to the wholesale transaction data, Khanna purchased the shares at a price of ₹263.15. However, the seller’s name was not immediately clear.
Who is Dolly Khanna?
Dolly Khanna is a Chennai-based investor who is known for picking lesser-known mid and small cap stocks. She has been investing in stocks since 1996.
Dolly Khanna’s portfolio, which is managed by her husband Rajiv Khanna, is generally geared towards more conventional stocks in the manufacturing, textiles, chemicals and sugar sectors.
Why did Dolly Khanna invest in Chennai Petroleum?
While we can’t know for sure why the star investor joined, there are some reasons we can guess…
For the March 2022 quarter, the company reported a fourfold increase in net income to ₹9.9 billion against ₹2.3 billion declared in the same quarter the previous year.
In the same quarter, net sales jumped 88% year-on-year (YoY) to reach ₹164.1 billion ₹87.4 billion in the prior year quarter.
The Company’s EPS increased to ₹68.8 in March 2022 from ₹15.6 in March 2021.
These are undoubtedly solid results. For more details, see the latest quarterly results from Chennai Petroleum.
We all know that the oil and gas industry has been hit hard by the Covid pandemic and the escalation of the Russian-Ukrainian war.
Despite this, according to the Indian Energy Outlook Report by the International Energy Agency (IEA), crude oil demand in India is expected to grow from 242 MMT in 2019 to 411 MMT by 2040.
While demand will be fueled by improved living conditions, the population is also expected to increase by 0.27 billion.
In line with this belief, the company’s 2021 annual report stated,
The expected demand for more crude oil will provide an opportunity to invest in new refining facilities and will require huge investments in the future.
In order to meet the expected growing energy needs in India, especially in the state of Tamil Nadu and other states, CPCL plans to set up a 9.0 MMTPA refinery at Nagapattinam in the Cauvery Basin of Tamil Nadu .
Another factor here is foreign investors.
Foreign institutional investors (FIIs) have increased their stake in the company over the past three quarters.
While all of these reasons are compelling, remember not to dive into a stock just because a market guru bought a stake.
Investing is not so simple!
How CPCL’s stock has performed recently
CPCL’s stock price opened 3.9% higher on Friday. As the session progressed, stocks stuck in the upper 10% circuit limit consecutively for the second trading session.
Over the past year, they have increased by more than 140%.
Over the past month, the stock has given multibagger returns by jumping 107%.
About the company
CPCL is a subsidiary of the state-owned Indian Oil Corporation which holds 51.9% of the company’s capital.
The company was established as a joint venture between the Government of India (GOI), AMOCO and the National Iranian Oil Company (NIOC) in 1965.
Operating in the downstream petroleum sector, CPCL produces a range of value-added petroleum products. The company has two refineries.
Located north of Chennai, the Manali refinery has a capacity of 10.5 million metric tons per annum (MTPA).
CPCL’s second refinery is located at Cauvery Basin in Nagapattinam and has a capacity of 1 m MTPA. To learn more about the company, see CPCL’s financial information sheet.
Disclaimer: This article is provided for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com