Investors never think twice before betting their money on Mukesh Ambani. Now that crude oil prices are touching record highs, his yet-to-be-operational, Reliance Petroleum has set Dalal Street on fire and left traditional Public Sector Undertaking (PSU) refiners far behind. Reliance Petroleum now has a market cap of Rs 1.17 lakh crore with a capacity of only 29 million tones. The figure is quite high in comparison to the combined market cap of IOC, BPCL, HPCL, MRPL, Essar Oil, Chennai Petroleum and Bongaigaon Refinery and their total capacity of 115 million tones.
More interestingly, while Reliance Petroleum''s revenues and profits will kick in only by the second half of next year, the existing refineries are sitting pretty with revenues of over Rs 5 lakh crore and profits of Rs 12,000 crore. Marketmen are not surprised though. Many feel that the differentiator for Reliance Petroleum will indeed be its higher gross refining margins (GRM), which could be twice than that earned by other refiners. Analysts say RPL''s GRM will be $17-18/tonne as against RIL''s GRM of $12-14. In contrast the figure for public sector refiners is rather low with GRM of $7-8/tonne.
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