On Thursday RPL commissioned its 580,000-barrel-a-day (29 million tonnes a year) refinery adjacent to its existing 33-million-tonne-per-annum refinery, owned by Reliance Industries. The first refinery at the same location was commissioned by Reliance in 1999.
The two units together form the world’s largest refining complex with an aggregate processing capacity of 1.24 million barrels of oil a day or 62 million tonnes a year.
The much awaited news of the Jamnagar refinery getting commissioned led to buying support for RPL shares since the early morning session. RPL gained more than 12 per cent in the intra-day trade on the BSE and touched a high of Rs 89.45. On NSE too, RPL shares soared by over 13 per cent to Rs 89.90.
However, profit taking towards closing hours weakened the stock. Besides, reports that Oil Ministry is believed to have turned down RPL’s request to export LPG from its newly commissioned refinery at Jamnagar in Gujarat also pushed the stock down a bit.
The RPL stock finally closed with a gain of 6.34 per cent Rs 84.70 on the BSE.
More than 5 crore shares worth Rs 450 crore were traded on both BSE and NSE.
The steep fall in the crude oil price since October has led to pressure on the refining margins of the refineries and fall in their share prices.
RPL shares value has come down substantially from its 52-week high of Rs 259. The stock recently touched a low of Rs 68.55 on November 21.
On year-on-year basis, the value of RPL shares have come down by more than 67 per cent as compared to a 55 per cent fall in the BSE oil and gas index.
Merrill Lynch, in its recent report while maintaining under-perform rating on Reliance Petroleum, had cut its price target to Rs 142 to Rs 59. “We have steeply cut Singapore complex refining margins forecast for FY10-FY11E. The cut in the benchmark refining margins has meant a steep cut in refining margins of Reliance Petroleum. This has led to 17-47 per cent cut in our RPL’s FY10-FY11 estimated earnings.”
Shares of Reliance Industries Ltd, the holding company of RPL, too has seen erosion in its value due to expectation of lower refining margins.