Essar Oil's huge debt is the main worry for its profits

Essar Oil's results for the quarter to March were almost similar to those of the preceding couple of quarters.

The company has stabilised its operations and the key booster to earnings will come from dollarisation of its debts, which should take three to six months.

Investors need to wait for deleveraging of its balance sheet and strong bottomline growth. Essar Oil's net profit for the March quarter at Rs 200 crore was better than in the quarter to December, when it reported a profit of Rs 32 crore.

Since the company is operating a much bigger and better refinery now than a year ago, comparing the sequential numbers will provide a better picture, instead of the normal year-on-year comparison.

On the key variable of gross refining margin at current prices (GRM), Essar Oil posted a marginally lower number at $9.06 per barrel against $9.75 in the December quarter.