Quick Take

At least a 10 bagger in 3 years

Details
Cals Refineries is establishing a 4.8 MMTPA (100,000 BPD) refinery at Haldia, India to be operational by July 2011 in phase I and another 4.8 MMTPA (100,000 BPD) by July 2012 taking the total capacity to 9.6 MMTPA (200,000 BPD) by July 2012

Yearly Refining Capacity Comparison with other existing refineries:

  • Reliance Industries (33 million tonne)
  • Essar Oil (7.5 million tonne)
  • Reliance Petroleum setting up 29 million tonne
  • MRPL (10.5 million tonnes)
  • Chennai Petroleum (9.5 million tonnes)
  • Bongaigaon Refinery (2 million tonnes)

Fundamentally Strong – Solid Management
Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. Mr. M. S. Ramachandran has over 38 years of experience in the Oil and Gas industry. He was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. He helped the government to implement various policies that would attract private players into the Oil & Gas sector. At I.O.C., he redirected the organization around key business lines with greater commercial focus and market facing capabilities. During his tenure, Mr. Ramachandran increased sales growth from USD 25 Billion to USD 34 Billion, which increased the net profit of company from USD 0.65 Billion to USD 1.2 Billion, raising the company’s Fortune ranking from 223 to 189.

Supply of Crude Guarenteed

Cals Refineries Ltd has signed a deal with oil major BP for up to 5 million tonnes of crude a year for a refinery. So the supply of crude is already guarenteed.

Upstream Integration

Spice Energy, the parent company of CALS has another subsidiary, Spice Exploration, which has operations in Africa and Indonesia from where crude could be made available.

Customers for finished products ready

Cals Refineries has signed a deal with oil major BP to buy up to 100,000 bpd crude for its refinery.  As per the deal, 60,000 bpd is confirmed, the balance of 40,000 is optional.

Additionally, Cals Refineries Ltd has signed a memorandum of understanding (MoU) with Bharat Petroleum Corporation (BPCL) for petro products off-take from CALS. The MoU has been signed in order to off-take the part of petroleum products by BPCL from CALS in its first phase which is a 100,000 BPSD crude oil refinery after accounting for the products committed to British Petroleum (BP) and the entire petro products from CALS in the second phase of expansion which is another 100,000 BPSD refinery at Haldia, West Bengal

Assembling instead of building

For the first phase CALS has bought a standing refinery in Germany in 2007, which will be disassebled and brought to India and constructed again.

For the second phase, Cals Refineries is buying a second-hand refinery from Canada.

Summary

Overall, a strong contender to be in your portfolio and mine too. Buy Cals Refineries and add more on declines.

Disclaimer:- Stock Market Baba’s opinions are based on his understanding of stocks and market movements. He does not take responsibility of your financial gain or loss and other outcomes based on following his gyaan. You need to consult a professional wealth manager/financial analyst before putting your hard earned money into any stock.

Cals Refineries - Google News
©2010 Google

Rally to 18000: Stocks that missed the bus - Hindu Business Line
Retail investors ride the galloping small-caps even as FIIs jump off - Hindu Business Line
Sensex ends tad lower; Hero Honda, RInfra gain - Myiris.com
Share Manipulation: See No Evil - Moneylife Personal Finance Magazine
Sensex plunges over 200 pts; Realty, banks worst hit - Myiris.com
Sensex lackluster amid volatility; RCom, HUL drop - Myiris.com
Sensex maintains uptrend; ICICI Bank, ACC gain - Myiris.com
Sensex ends lower (prov) - Myiris.com
Sensex rallies on heavy buying; CD, realty gain - Myiris.com
Sensex dips further; HDFC, RIL, Infy drag - Myiris.com

Related posts:

  1. Parekh Aluminex (532606, PARAL) Analysis