Religare Hichens Harrison has said that Reliance Petroleum's (RPL) state-of-the-art refinery is slated for commencement by end-2008 with
a capacity of 29mtpa (~580,000bpd), making it the sixth largest plant in the world. The refinery has a Nelson complexity of 14 – much higher than 11.7 for Reliance Industries' existing plant – and can process heavy crude types up to APIs of 17.
However, the brokerage
highlighted that about 8.8 million barrels per day of new refining capacities are expected to come on stream between 2008–2013, particularly in China, India and the Middle East.
Further, growing concerns of an economic slowdown are leading to lower demand for gasoline and petroleum products, which would keep refining margins under pressure.
Religare Hichens has a target price of Rs 97 for RPL, and has an ‘accumulate’ rating on the stock.
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