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LANKA INDIAN OIL CORPORATION - Maharaja

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1LANKA INDIAN OIL CORPORATION - Maharaja Empty LANKA INDIAN OIL CORPORATION - Maharaja Tue Aug 16, 2022 11:07 pm

Maharaja


Expert
Expert

( FYI : Not investment advise, do your own research )

Due to many of requests from you all, I decided to do a little article.

Below is the inputs for last qtr

April 2022

Avg World Oil prices (WTI) - $105

LIOC selling prices

Petrol (92 Octane) – Rs. 338/-
Petrol (95 Octane) – Rs. 367/-
Auto Diesel – Rs. 289/-
Super Diesel – Rs. 327/-

May 2022

Avg World Oil prices (WTI) - $114

LIOC selling prices

Petrol (92 Octane) – Rs. 420/-
Petrol (95 Octane) – Rs. 450/-
Auto Diesel – Rs. 400/-
Super Diesel – Rs. 445/-


June 2022

Avg World Oil prices (WTI) - $123

LIOC selling prices

Petrol (92 Octane) – Rs. 470/-
Petrol (95 Octane) – Rs. 550/-
Auto Diesel – Rs. 460/-
Super Diesel – Rs. 520/-

April/June financial

Qtr Rev - 49.9 Bn
Qtr Cost of sale - 34.4 Bn
Qtr GP - 15.5 Bn
Other costs - 5.6 Bn
Profit - 9.9 Bn
EPS - 18.6


Now lets predict the next qtr


July 2022

Avg World Oil prices (WTI) - $91

Petrol (92 Octane) – Rs. 450/-
Petrol (95 Octane) – Rs. 540/-
Auto Diesel – Rs. 440/-
Super Diesel – Rs. 510/-

* Oil barrel drop is $32/barrel ($123-$91) (compared to June)
* Selling price drop is only Rs.10 & Rs.20
Result - Huge jump in gross profit value



August 2022


Avg World Oil prices (WTI) - $ 86 and falling

Petrol (92 Octane) – Rs. 450/- NO CHANGE
Petrol (95 Octane) – Rs. 540/-  - NO CHANGE
Auto Diesel – Rs. 430/-  ONLY Rs.10/- Decrease
Super Diesel – Rs. 510/-  NO CHANGE

* Oil barrel drop is $5/barrel ($91-$86) (compared to July)
* Selling price drop is only Rs.10 (only diesel)
Result - Another huge jump in gross profit value


September 2022

Avg World Oil prices (WTI) - predict $70-$75

Assume they decrease Rs.20/- for all fuel types

Petrol (92 Octane) – Rs. 430/- 
Petrol (95 Octane) – Rs. 520/-  - 
Auto Diesel – Rs. 410/-  
Super Diesel – Rs. 480/- 

*Oil barrel drop is $15/barrel (compared to Aug)
* Selling price drop is only Rs.20
Result - Still I expect increase gross profit value


Conclusion 


Cost of sale is reduced from 43% by Sep 2022 compared to April 2022.
But Rev reduced only 8..5% max (assume 9%)

Result = 43%-9% =34% increase in GP

July-Sep Qtr GP - 15.5 Bn x 134% =20.8
Other costs - 5.6 Bn 
Profit - 15.2 Bn
July-Sep EPS - Rs.28.5




Oct - Dec 2022 - 50 more sheds will come and Rev will again jump by 23.4%


50 new shed /213 existing sheds *100 = 23.4%


So lets assume 20% growth in EPS for Oct-Dec


Oct-Dec Qtr eps - Rs.28.5 x120% = Rs.34.2


Then Jan - Mar 2023  lets expect a EPS drop of 30% (worst case)


Jan-Mar 2023 Qtr EPS - Rs. 24.0




Lets add and calculate the Net earnings for the next financial year.


April - June 2022 - Rs.18.6
July - Sep 2022 - Rs.28.5
Oct - Dec 2022 - Rs.34.2
Jan - Mar 2023 - Rs.24
Total - Rs.105.3


Lets round off to Rs.100/- for easier understanding


At PE of 6 the share must trade at Rs.600/-








Maharaja



Chula


Equity Analytic
Equity Analytic

Thanks, your calculations look very reasonable. Your predictions are generally pretty good. 

However, with all due respect Maharaja, if Russia oil gets in to the market and starts dumping petrol @100 Rs LESS than the Sri Lanka market price (selling at a loss to catch the market), what will happen? All the people will start pumping Russia oil and LIOC monopoly may get crumbled. LIOC will not have the power to bring down the price as much as Russia oil as they indirectly get oil from them. Moreover, Sri Lanka won't be able to intervene as they have only a maximum retail price. What do you think will happen at such a scenario? Frankly, I hope it doesn't happen. But in the business world, with head on competition, nothing is impossible. 

The main reason, I am writing this as in these forums rarely do they discuss opposing views. This was clear when EXPO was at 400 and there were Marginal trading issues. Most of the indicators were predicting that the market was going down. However, very few pointed out that possibilities while EXPO was declining between 400 - 170. 

-Chula-



Last edited by Chula on Mon Aug 22, 2022 9:36 pm; edited 1 time in total

Maharaja


Expert
Expert

Ceypetco is not competitive business operation.
Ceypetco is only competitive in corruption and mis-management.
Do not worry about those donkeys.


Maharaja

Chula


Equity Analytic
Equity Analytic

Hope so Maharaja. You got a good point. Anyway, thanks for the reply.

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