Reliance Petroleum valued at $8.5B

By agencies   |   Thursday, 09 March 2006, 20:30 IST
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NEW DELHI: Reliance Petroleum Ltd, a unit of Reliance Industries that plans to sell 1.8 billion shares in an initial public offering to raise up to $1.3 billion, has been valued for upto $8.5 billion by global banking major HSBC. Terming RPL's 580,000 barrels per day (29 million tons per annum) refinery at Jamnagar in Gujarat as "well planned and designed project," HSBC in its March 2 Global Research report said "our fair value range for RPL on a Discounted Cash Flow (DCF) basis, the fair value range is $6.1-8.1 billion." HSBC forecasted a net profit of almost $1 billion for RPL in 2009-10, the first full year of operations, driven by refining margin of over $10 per barrel and 95 percent capacity utilization. "We expect a modest rise in earnings of 12 percent in 2010-11 to $1.2 billion.” The $6 billion cost of completing the project was at the lower end vis-a-vis comparable projects, it said. "RPL's proposed refinery is even more complex than RIL's existing (660,000 barrels per day Jamnagar) refinery. "Its ability to process crudes even heavier than RIL's existing refinery and produce a superior product slate would help achieve high refining margins," HSBC said.