Well, the reasons are simple……
Chennai Petroleum posted strong financial results on 28 Apr 2022.
Adding fuel to the flame, ace investor Dolly Khanna bought 1 million shares through open market buy on NSE on Thursday, 28 April 2022. This gives them about 0.7% stake. 263 m
As per the wholesale transaction data, Khanna bought 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 choosing the lesser known midcaps and smallcaps. She has been investing in stocks since 1996.
Dolly Khanna’s portfolio, which is managed by her husband Rajiv Khanna, generally leans towards more traditional stocks in manufacturing, textiles, chemicals and sugar stocks.
Why did Dolly Khanna invest in Chennai Petroleum?
While we can’t know for sure why Star Investor bought into it, there are a few reasons we can speculate…
For the March 2022 quarter, the company registered a four-fold jump in its lows 9.9 billion against 2.3 billion reported in the same quarter last year.
During the same quarter, net sales jumped 88% year-on-year (YoY) to 164.1 billion 87.4 billion in the prior year quarter.
Company’s EPS increased 68.8 in March 2022. from 15.6 in March 2021.
These are undoubtedly concrete results. For more details check Chennai Petroleum’s latest quarterly results.
We all know that the oil and gas industry has been greatly affected by the COVID pandemic and its escalating outbreak. Russo-Ukraine War,
Despite this, according to the International Energy Agency (IEA)’s Indian Energy Outlook report, crude oil demand in India is expected to increase from 242 MMT in 2019 to 411 MMT by 2040.
While improved living conditions will boost demand, the population is also expected to increase by 0.27 billion.
In line with this belief, the company’s annual report for 2021 states,
The expected demand for more crude will provide an opportunity to invest in new refining facilities and will require huge investments in the future.
In order to meet the growing energy needs expected in India, especially in the state of Tamil Nadu and other states, CPCL is planning to set up a 9.0 MMTPA Refinery at Nagapattinam in the Cauvery Basin in Tamil Nadu.
Another factor here is foreign investors.
Foreign institutional investors (FIIs) have been increasing their stake in the company for the past three quarters.
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While all of these reasons are compelling, remember not to get into a stock just because a market guru has bought a stake.
Investing is not that easy!
How CPCL stock has performed recently
The share price of CPCL opened with a gain of 3.9 percent on Friday. As the session progressed, the shares closed in the upper circuit range of 10% for the second consecutive trading session.
In the past year, they have rallied over 140%.
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The stock has given in the last one month multibagger returns With an increase of 107%.
about the company
CPCL is a subsidiary of the state-run Indian Oil Corporation which holds 51.9% stake in the company.
The company was formed in 1965 as a joint venture between the Government of India (GOI), AMOCO and the National Iranian Oil Company (NIOC).
Operating in the downstream petroleum sector, CPCL produces a range of value added petroleum products. The company has two refineries.
The Manali Refinery, located in North Chennai, has a capacity of 10.5 Metric Tonnes Per Annum (MTPA).
CPCL’s second refinery is located in Cauvery basin at Nagapattinam and has a capacity of 1 mtpa. To know more about the company, visit Financial Fact Sheet of CPCL,
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com