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Refining margins at Essar Energy rose sharply in the first quarter of the year as the closure of several Japanese refineries put pressure on supply.
Gross refining margins at Vadinar were up 50 per cent to $8.71 in the quarter ending March, the London-listed firm said in an interim statement on Tuesday. It said rising demand for petrol, diesel and other refined products, and turmoil in West Asia also added to the pressure.
Coal blocks
Hopes that the company would finally gain approval from the government to clear forest for the Mahan coal block in Madhya Pradesh, and the Chakla and Ashok Karkata coal blocks in Jharkhand were also revived as the firm said it remained “optimistic of a favourable outcome.”
An Empowered Group of Ministers, which has been charged with examining the environmental impact for the coal mines, is expected to meet next month.
“Essar Energy has underperformed the FTSE 100 by 29 per cent in the year to date and we see the current share price as a good entry point,” wrote Credit Suisse analyst Mr Ritesh Gaggar in a note to clients, highlighting the upcoming government talks as a potential positive.
“Although it is almost impossible to give clarity on timing on issue of government, we do not rule out a likely decision in the coming months.”
Shares of Essar Energy, which will hold its annual general meeting in London on Wednesday, rose sharply in London trading, up nearly 4 per cent in the morning trade.
Power generation
The company said that total generation at its power plants rose 10 per cent year-on-year in the first quarter, with commercial operations commencing at Vadinar P1.
The company says it remains on track to complete a total of $4.9 billion of oil and power projects this year, with the $1.8 billion expansion of the Vadinar refinery by the final quarter of the year.
Stanlow takeover
Its takeover of Royal Dutch Shell's UK refinery, Stanlow, is all set to be completed in the second half of the year, as a consultation with staff ended last Friday. The company will soon hold an emergency general meeting, required under its listing rules, to approve the deal by a simple majority, though this will be a formality with Essar Global holding a 76.7 per cent stake in the company.
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