Why GRMs are multi year high?
- refiners shut several unprofitable facilities after crude turns negative in pandemic
- refining capacity down to 17.2 Mn bpd in Mar-22 bpd from 19 Mn bpd in April-20 while Downstream products demand remain robust, (1st time in 30 yrs).
Cont
- China & Russia are biggest refining nations, with sanction & war their refining capacity could not be used to meet World's fuel demand which rebounded to pre pandemic levels
- China Covid restrictions
- refiners who closed refineries in pandemic have no plans to re-open
What it means for Indian refiners
- They are making more money as they got discounted crude from Russia, adds $3 in GRM
- MRPL said every $1 inc in GRM add 700cr rev
- MS says $1 inc in GRM implies 4% EPS growth for Ril
- IOCL/BPCL/HPCL refining gains offset by marketing losses
But since its commodity & rise is temporary and not sustainable.
Biden has been forcing refiners to do moe production
US recession may hurt fuel demands
Some refiners also expanding
With crude fallling, pressure mounts on refiners to reduce downstream products price
Cont
Definitely Q1 will be excellent but because market is forward looking it will price down that its not sustainable. Hence small companies like MRPL & Chennai Petro which saw steep rise in share prices are falling with same speed. Be cautious ⚠️
Cont
Go with Reliance where share price has not seen any rise due to this event, whils Q1 remains strong just like Q4
On Dec 5, SEBI dropped a bombshell: an Interim Order cum Show Cause Notice against Mishtann Foods (MFL).
Here's a thread 🧵
Mishtann Foods is not just cooking rice, it's cooking its books.
#Redflags #corporategovernance #mishtannfoods
The Rise and the Red Flags 🚩
Market cap: ₹1600 Cr as of Dec 4, 2024(Before SEBI Order)
2 Lower Circuit of 20% in last 2 days
Public shareholders surged 800x in 6 years
(FY18: 516 → Sep 2024: 4.23 lakh)
Promoter Hitesh Patel sold ~3 Cr shares (₹50 Cr) in Jul-Aug 2024.
Before Analysing,
Some Suspicious Metrics 📊
₹1288 Cr sales with just ₹3 Cr in fixed assets (Asset T/O: 400x!)
Margins jumped from 2% to 28% in 4 yrs
Operating cash flow? Negative for 6 yrs
₹16 Cr inventory for ₹1288 Cr sales?
Just 5 permanent employees.
Before we move ahead, Beat The Street has been front runner in exposing multiple frauds, redflags and conducting forensic analysis on multiple listed entities
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Fund Diversion
Beat The Street have raised multiple concerns on fund diversion at Varanium Cloud - some of those have been noted by even SEBI also.