>> Saturday, June 20, 2009
Target price: Rs 242
IDFC-SSKI Securities has reinitiated coverage on Essar Oil with an ‘outperformer’ rating and price target of Rs 242. “Our optimism on the stock stems from the potential size and scale of the business, along with an attractive E&P portfolio,” the institutional brokerage said. “We see E&P proving to be a significant growth driver for EOL in the long term, and have attributed a value of Rs 58 per share to the reserves.”
“The capacity expansion to 16m tpa in phase I and 34m tpa in phase II over FY10-13E would impart scale to EOL. Post-expansion, EOL will have one of the largest single-location refineries in the world, which would lend sourcing flexibility and improve operational efficiencies,” IDFC SSKI added.