Oil & Gas - Fueling the price n Emkay

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Oil & Gas

Fueling the price

n     EGOM has decided to hike Rs.3/ltr on Diesel, Rs.2/ltr on Kerosene and Rs.50/cyl on LPG. Steep cut in custom duty by 5% on Crude oil import and in all petroleum products

n     The total under recovery for FY12E previously was at Rs.1700bn but considering the steps taken by the EGOM, the total under recovery will reduce by Rs.490bn to Rs.1200bn

n     Reduction in Custom and Excise duty will lead to revenue loss of ~Rs.490bn to the government

n     Valuation looks attractive for OMC’s and GAIL we maintain  BUY on HPCL and Accumulate on BPCL, IOC, and GAIL