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Reliance Petroleum limited

Reliance is expanding building up the largest refinery complex of the world at Jamnagar. In 2 years the refining should be up in full swing. I believe that investing in the company would be a wise decision. I today purchased 20k worth of shares myself.

Reliance invested in the company at 60/- a year ago. (and the IPO was also at the same price) So 65 is actually a good price.
With the crude price sky rocketing, the only way to keep the margins high is to process the crudest oil. The oil which no other refinery will accept is always available at throw away prices. Employing the latest technologies and due to the colossal size RPL has an undue advantage in processing such oil.

As the oil reserves gets depleted and prices rise, more and more poor quality crude wells would be drilled and they need refineries like Reliance to process.

Reliance has a good track record of thinking big, executing on schedule. They do shady deals, but they are known to share the profits with the shareholders.

Cons:
1)India is completely dependent on imports for majority of its oil needs.
2)The pricing on Kerosene, LPG and the cross-subsidies might make private refineries to look for export market (Read higher transport cost)
3)There is a 2 years of waiting period before revenue starts coming.
4)Stock Market is at Peak. So have a long patience (Read next summer)

3 replies on “Reliance Petroleum limited”

RPL is dfly a safe investment esply when there is a bear market, which I guss is around the corner.

BTW, what do you think of Nissan Copper?
I compared with Hindustan copper –
Hindustan – P/E = 68 or so
Nissan – P/E = 49 at the upper end

But Investment advisors (on the internet) say that it’s an average issue.

Nissan is much smaller than Hindustan Copper though and it is using the money for expanding its production facilities.

If you want to sell it the day it is getting listed…. I have no Idea.
For long term investment:
My advice stay away from metals esp copper.
http://www.lme.co.uk/dataprices_pricegraphs.asp (compare prices from 2003 to today.)

Extraction cost remains almost constant. but any dip in the metal price simply wipes out the profitability. Copper is trading at an all time high. so I won’t put my money in it.

i was digging up the old posts.. and guess what….
my hunch about RPL turned true 🙂 the stock is now at 270+ a return of over 4 times in a year 🙂
also Nissan Copper is now trading below its issue price.. so i was safe not to invest there 🙂

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