ManagementExpansion of Essar's Vadinar refinery on time
Essar Oil Ltd (EOL) is on track to complete expansion of its facility at Vadinar refinery in Gujarat to 16 million tonnes by December 2010, brokerage company IDFC-SSKI said in its report on the company while putting a price target of Rs 194 on its stock.
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It is likely to achieve financial closure for Phase-II expansion of the refinery by the end of 2009-10, the report generated after IDFC-SSKI met the company management said.
“While refiners across Asia are currently facing the heat with benchmark GRMs (gross refinery margins) at historical lows, we feel margins have bottomed out,” it said in a report made after the meeting.
GRMs are the earnings on processing every barrel of crude oil.
“The timing of EOL’s expansion would coincide with the expected economic revival, implying significant value addition over the long term,” it said, adding it continues to maintain its ‘Outperformer’ rating on the company stock with a price target of Rs 194 per share, 35 per cent upside from the current levels.
Essar is also ramping up its focus on the exploration and production segment, and the Coal Bed Methane (CBM) asset in Raniganj in West Bengal, which would begin gas production shortly, is expected to add materially to financial metrics over the medium term.