Are Nayara Energy Unlisted Shares Worth Investing In? | Nayara Energy IPO

𝗔𝗯𝗼𝘂𝘁 𝗡𝗮𝘆𝗮𝗿𝗮 𝗘𝗻𝗲𝗿𝗴𝘆 𝗨𝗻𝗹𝗶𝘀𝘁𝗲𝗱 𝗦𝗵𝗮𝗿𝗲𝘀

Nayara Energy Ltd. (formerly known as Essar Oil) is a prominent player in the global energy sector, specializing in the refining of crude oil and the marketing of petroleum products. The company has a significant presence in India, Singapore, Mozambique, the United Arab Emirates, South Africa, and other international markets. Its product portfolio includes petcoke, sulphur, high-speed diesel, high flash high-speed diesel, light diesel oil, bitumen, and fly ash, among others.

Nayara Energy owns and operates India's second-largest single-site refinery, renowned for its advanced and complex infrastructure. With a capacity of 20 million metric tons per annum (MMTPA) and a high complexity index of 11.8, this refinery contributes approximately 8% of the nation's total refining capacity. The company is integrated across the entire hydrocarbon value chain, from refining to marketing, and is now expanding into the production of chemicals from crude oil.

Nayara Energy boasts the fastest-growing fuel retail network across India. In the fiscal year 2022, it expanded significantly by adding 598 new outlets, bringing the total number of retail outlets to 6,568 by the end of the year.

In 2016, Nayara Energy was acquired by Rosneft, the world's largest publicly traded oil and gas company by liquid hydrocarbon production and reserves, along with an investment consortium led by Trafigura, a global commodity trading firm, and UCP Investment Group. As of January 2023, Trafigura's entire stake was acquired by Hara Capital Sarl of the Italy-based Marretarra Group.

Previously, Nayara Energy was a publicly traded entity until it was taken private in a leveraged buyout, finalized on December 30, 2015, with a delisting valuation of ₹380 billion. The company rebranded from Essar Oil Limited to Nayara Energy Limited in May 2018. Established in 1989, Nayara Energy is headquartered in Mumbai, India.

𝗟𝗲𝗮𝗿𝗻 𝗮𝗯𝗼𝘂𝘁 𝗡𝗮𝘆𝗮𝗿𝗮 𝗘𝗻𝗲𝗿𝗴𝘆 𝗜𝗣𝗢 𝗗𝗲𝘁𝗮𝗶𝗹𝘀

Currently, the company has not submitted any Draft Red Herring Prospectus (DRHP).

𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗠𝗼𝗱𝗲𝗹 𝗼𝗳 𝗡𝗮𝘆𝗮𝗿𝗮 𝗘𝗻𝗲𝗿𝗴𝘆 𝗣𝗿𝗲 𝗜𝗣𝗢

Due to a significant shortfall in domestic production, both private and public sector refiners (PSUs) in India heavily rely on imports to source raw materials. The parent companies, namely Rosneft Group, a state-owned Russian oil giant, and Trafigura Group, a Swiss-based commodity trader, hold the right of first offer under their respective contracts with the Group for both the sale of raw materials and the purchase of finished products. In FY22, revenue from the sale of products through related party transactions (RPT) amounted to ₹6,787.8 crore (5.6% of total revenue), with 86% of this revenue generated through transactions with Trafigura. Additionally, raw materials worth ₹6,492.7 crore (7.7% of the cost of goods sold) were procured from these entities, with the procurement ratio from Rosneft to Trafigura being approximately 4:1. Rosneft Group and Trafigura Group also provide ongoing advice and market insights to the Group, aiding in strategic decisions regarding crude procurement and the sale of finished products. For these advisory services, the company pays a fee of $0.1 for every barrel of raw materials purchased and finished products exported.

Winds of Change:

On January 11, 2023, Trafigura Group Pte Ltd announced the completion of the sale of its 24.5% indirect minority interest in Nayara Energy Limited to Hara Capital Sarl, a wholly owned subsidiary of Mareterra Group Holding (formerly Genera Group Holding S.p.A.), an investment group specializing in energy and carbon efficiency infrastructure. According to market sources, Trafigura received the book value for its stake, which was listed at $165.9 million in its last annual report and had been classified as "held for sale" since 2021. This move occurs amid a broader trend of major global trading companies distancing themselves from Rosneft and other Russian entities due to the Russo-Ukrainian crisis. As a result, it is anticipated that most of Nayara Energy’s open-market operations (OMO) will now be conducted through its international subsidiary, Nayara Energy Singapore Pte Ltd.

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