Current Valuation Overview
As of the latest trading session, Gandhar Oil Refinery’s P/E ratio stands at 14.67, while its P/BV ratio is recorded at 1.06. These figures position the company within an attractive valuation range relative to its historical levels and industry peers. The enterprise value to EBITDA (EV/EBITDA) ratio is 8.43, further supporting the notion of a valuation that is competitive within the oil refining sector.
The company’s stock price closed at ₹139.85, marking a 4.64% change on the day, with intraday highs reaching ₹141.70 and lows at ₹133.85. The 52-week price range extends from ₹120.60 to ₹234.05, indicating a significant price volatility over the past year.
Comparison with Industry Peers
When compared with other companies in the oil sector, Gandhar Oil Refinery’s valuation metrics reveal a distinct profile. For instance, Mangalore Refinery and Petrochemicals Limited (MRPL) exhibits a P/E ratio of 25.16 and an EV/EBITDA of 9.41, while Chennai Petroleum Corporation Limited (CPCL) shows a P/E of 11.65 and EV/EBITDA of 6.77. Deep Industries and Hindustan Oil Exploration present higher valuation multiples, with P/E ratios of 13.73 and 18.87 respectively, and EV/EBITDA ratios of 9.90 and 15.43.
Notably, Gandhar Oil Refinery’s P/E ratio is positioned between CPCL and Deep Industries, while its EV/EBITDA ratio is slightly below Deep Industries but above CPCL. This suggests that the company’s valuation is neither at the lower end nor at the premium end of the spectrum, reflecting a moderate market assessment.
Historical Valuation Context
Historically, Gandhar Oil Refinery’s valuation parameters have oscillated between very attractive and attractive categories. The recent revision indicates a movement from a very attractive valuation to an attractive one, signalling a subtle shift in how the market perceives the company’s earnings and asset base relative to its share price.
Such a shift may be influenced by the company’s operational performance, sector dynamics, or broader market conditions. The return on capital employed (ROCE) at 10.62% and return on equity (ROE) at 7.23% provide additional context for investors evaluating the company’s efficiency in generating returns from its capital and equity base.
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Price Performance Relative to Sensex
Examining Gandhar Oil Refinery’s price returns against the benchmark Sensex index reveals a mixed performance over various time horizons. Over the past week, the stock recorded a return of 14.63%, significantly outpacing the Sensex’s 0.02% return. However, over the one-month period, the stock’s return was -3.52%, compared to the Sensex’s 0.14% gain.
Year-to-date (YTD) figures show a decline of 34.34% for Gandhar Oil Refinery, contrasting with the Sensex’s 8.37% increase. Similarly, the one-year return for the stock is -38.06%, while the Sensex posted a 3.59% gain. These figures highlight the stock’s volatility and the challenges it has faced relative to broader market trends.
Valuation Multiples and Market Capitalisation
Gandhar Oil Refinery’s market capitalisation grade is noted as 3, indicating a mid-sized market cap within its sector. The company’s enterprise value to capital employed (EV/CE) ratio is 1.05, and enterprise value to sales (EV/Sales) ratio is 0.40, both of which suggest a valuation that is moderate when considering the company’s asset base and revenue generation.
The dividend yield stands at 0.36%, which is relatively modest and may influence income-focused investors’ considerations. The PEG ratio is recorded at 0.00, which may reflect either a lack of earnings growth projection or data unavailability, warranting further analysis for growth expectations.
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Implications for Investors
The recent revision in Gandhar Oil Refinery’s valuation parameters suggests a nuanced shift in market perception. While the company’s P/E and P/BV ratios remain within an attractive range compared to peers, the stock’s price performance relative to the Sensex indicates periods of underperformance, particularly over longer time frames.
Investors analysing Gandhar Oil Refinery should consider the balance between valuation attractiveness and operational metrics such as ROCE and ROE. The company’s moderate dividend yield and stable EV/EBITDA ratio provide additional layers of insight into its financial health and market positioning.
Furthermore, the comparison with peers highlights that while Gandhar Oil Refinery is not the cheapest stock in the sector, it is also not among the most expensive. This middle-ground valuation may appeal to investors seeking exposure to the oil refining industry without assuming the premium valuations seen in some competitors.
Sector and Market Context
The oil sector continues to face a complex environment shaped by fluctuating crude prices, regulatory changes, and evolving energy demand patterns. Gandhar Oil Refinery’s valuation adjustment may reflect these broader sectoral dynamics, as well as company-specific factors such as production capacity, refining margins, and strategic initiatives.
Given the stock’s 52-week high of ₹234.05 and low of ₹120.60, the current price near ₹140 suggests that the market is pricing in a cautious outlook. This valuation context is important for investors to consider alongside fundamental analysis and sector trends.
Conclusion
Gandhar Oil Refinery (India) presents a valuation profile that has undergone a recent shift, moving from very attractive to attractive territory. Its P/E ratio of 14.67 and P/BV of 1.06 position it competitively within the oil refining sector, though its price performance relative to the Sensex indicates volatility and challenges over the medium term.
Investors should weigh these valuation metrics alongside operational returns and sector outlooks to form a comprehensive view. The company’s moderate market capitalisation and dividend yield add further dimensions to its investment profile, making it a stock that warrants careful consideration within the oil industry landscape.
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