28 June 2011

Oil India Limited (OILI.BO) Research Tactical Idea:: Morgan Stanley Research,

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Oil India Limited (OILI.BO)
Research Tactical Idea
We believe the share price will rise in absolute terms over the next 45 days.
The Indian government on Friday took meaningful steps towards addressing its mounting subsidy burden with a
combination of retail price hikes and rationalisaiton of duty structure on petroleum products. It hiked the retail prices of
diesel, kerosene, and LPG by 7.7%, 16.5%, and 14.3%, respectively. In addition, customs duty on crude oil is now
abolished (it had been 5%) and for all other products it was reduced by 5%. The excise duty on diesel was cut by
Rs2.6/litre. These measures have resulted in the highest ever reduction in subsidy burden, by US$13.9bn to US$25.8bn.
For Oil India, its net realisation could improve to US$70-75/bbl depending on the subsidy sharing mechanism.  We expect
the market will react positively to these developments.
We estimate that there is about a 70% to 80% or "very likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Overweight
Industry View: Attractive

No comments:

Post a Comment