Search the Internet          Tips  Sites: Finance, Investment

Goldman cuts Reliance Petro estimates

Goldman Sachs has cut earnings estimates for the current year and next year for Reliance Petroleum Ltd, India's largest private sector refiner, due to higher tax outgo and weaker refining margins.

Earnings for the current year ending March 2002 has been cut by 24 per cent to Rs 16 billion ($341.8 million) and by 19 per cent to 22.3 billion for the following year, it said in a report dated May 1.

The firm said it has retained its market performer rating on the stock.

Reliance Petroleum operates a 540,000 barrels-per-day refinery in the western Indian state of Gujarat, which was rocked by a killer earthquake in January.

On Monday, RPL said the quake caused business loss of Rs 640 million and shutdown the refinery for a brief period.

Net profit for January-March was lower at Rs 2.97 billion versus Rs 4.41 billion in the preceding October-December quarter. Gross refinery margin at $5.3 per barrel was also weaker than $5.8 per barrel for the full year.

In the year ended March, its first year of commercial operations, RPL posted a net profit of Rs 14.64 billion on sales of Rs 309.63 billion.

Goldman said the January-March profit was lower than its forecast of 4.5 billion as the company paid tax of 1.17 billion rupees while it had expected it to pay none.

The RPL stock, with the fourth-highest weightage of 9.5 per cent in the Bombay index, is seen as fairly valued compared to other Indian and Asian refiners, the securities firm said.

"We believe the stock is fairly valued at current levels and the stock price reflects most of the positive news," it added.

Tell us what you think of this report