Chennai Petro Hits Fresh High Ahead of Record Date for Highest-Ever Dividend

On Tuesday, Chennai Petroleum Corporation Ltd. (CPCL), a subsidiary of Indian Oil Corporation Ltd., saw its shares soar by as much as 16%, reaching a record high of Rs 1,265. This surge comes as investors position themselves ahead of the company’s upcoming dividend payout.

Significant Dividend Announcement

In April, CPCL declared a final dividend of Rs 55 per share, which is double the Rs 27 per share announced in the previous financial year. The record date for this dividend payout is set for Friday, July 19. To be eligible, shareholders must have CPCL shares credited to their portfolio by or before this date. The total dividend payout will amount to Rs 819 crore, representing nearly 30% of CPCL’s full-year net profit of Rs 2,711 crore. 

Exceptional Stock Performance

CPCL’s stock has been a standout performer on the Nifty 500 index, emerging as the top gainer in Tuesday’s trading session. The company’s shares have posted gains every month this year, except for May, when the stock saw a 10% decline. Notably, July has seen the stock’s most impressive performance, with a 26% surge so far, marking the best month for CPCL this calendar year.

Consistent Dividend History

Since its inception, CPCL has been consistent in rewarding its shareholders. The company has declared 19 dividends since August 16, 2000. Over the past 12 months, CPCL has distributed an equity dividend amounting to Rs 27 per share, reflecting its commitment to shareholder value.

Brief History of CPCL

Founded in 1965 as Madras Refineries Ltd., CPCL was a joint venture between the Government of India, National Iranian Oil Co (NIOC), and American Oil Co (a subsidiary of Standard Oil Co.). In 2001, Indian Oil Corporation Ltd. (IOCL) acquired the government’s equity stake for Rs 510 crore. In 2003, NIOC transferred its stake to its affiliate, Naftiran Intertrade Co Ltd (NICL). Currently, IOCL holds a 51.89% stake in CPCL, with NICL owning 15.40%. The remaining shares are held by financial institutions, corporate bodies, and the general public.

Expanding Operations

CPCL operates a refinery in Manali with a capacity of 10.5 million metric tonnes per annum (mmtpa). The company produces a range of petroleum products, lubricants, and additives, and supplies high-quality feedstock such as propylene, superior kerosene, butylenes, naphtha, paraffin wax, and sulphur to various industries.

In a strategic move to expand its operations, CPCL, through a joint venture, is setting up a 9-mmtpa refinery at the Cauvery Basin in Nagapattinam. The estimated project cost is Rs 31,580 crore. Both CPCL and IOCL’s boards have approved the expansion plans. The joint venture will see IOCL and CPCL each holding a 25% stake, with the remaining 50% held by other investors. CPCL’s investment in this project is expected to be around Rs 2,570 crore.

Technological Advancements

CPCL boasts a high Nelson Complexity Index (NCI) of 10.03, indicating its ability to process a variety of crude oils and achieve high-value addition. This flexibility enhances CPCL’s operational efficiency and product range.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.