Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Oil and Gas
S ubsidy payout may hit upstream
Event: channel checks suggest 1QFY12 subsidy may be based on actual
Our channel checks suggest that the government may assign a subsidy burden of
Rs 145bn (versus our earlier estimate of Rs 120bn) to the upstream companies for
1Q12. Of this, Rs120bn/Rs17.8bn/Rs6.8bn could be assigned to ONGC/OIL/
GAIL.
Impact: upstream hit, OMCs benefit on a cash flow basis
We estimate that this is 33% of the actual 1QFY12 losses versus our expectation
that the upstream payout will be 38.75% and based on estimated full-year FY12
losses. We lower our forecast for ONGC’s 1QFY12 PAT from Rs49bn to Rs41bn.
This does not impact our full-year estimates as the payout over subsequent quarters
will be lower now. The payout by Oil India as a percentage of upstream share has
increased and that by GAIL has decreased compared to earlier quarters.
Action: prefer upstream over downstream companies
We continue to prefer the upstream companies as we expect progressive but slow
reforms on the pricing of petroleum products and also on more clarity in assigning
subsidy to the upstream companies. We maintain our stance that the benefit to
OMCs of any reforms will be limited as: 1) the private sector will step in; and 2)
we believe the OMC’s losses are only opportunity losses that the government
makes up for.
Top picks: continue to like ONGC and GAIL, and OIL in midcap
We believe the upstream companies will be the key beneficiaries of petroleum
product pricing reforms. We have a Buy rating on ONGC, OIL and GAIL,
although ONGC may be affected by an overhang from FPO.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Oil and Gas
S ubsidy payout may hit upstream
Event: channel checks suggest 1QFY12 subsidy may be based on actual
Our channel checks suggest that the government may assign a subsidy burden of
Rs 145bn (versus our earlier estimate of Rs 120bn) to the upstream companies for
1Q12. Of this, Rs120bn/Rs17.8bn/Rs6.8bn could be assigned to ONGC/OIL/
GAIL.
Impact: upstream hit, OMCs benefit on a cash flow basis
We estimate that this is 33% of the actual 1QFY12 losses versus our expectation
that the upstream payout will be 38.75% and based on estimated full-year FY12
losses. We lower our forecast for ONGC’s 1QFY12 PAT from Rs49bn to Rs41bn.
This does not impact our full-year estimates as the payout over subsequent quarters
will be lower now. The payout by Oil India as a percentage of upstream share has
increased and that by GAIL has decreased compared to earlier quarters.
Action: prefer upstream over downstream companies
We continue to prefer the upstream companies as we expect progressive but slow
reforms on the pricing of petroleum products and also on more clarity in assigning
subsidy to the upstream companies. We maintain our stance that the benefit to
OMCs of any reforms will be limited as: 1) the private sector will step in; and 2)
we believe the OMC’s losses are only opportunity losses that the government
makes up for.
Top picks: continue to like ONGC and GAIL, and OIL in midcap
We believe the upstream companies will be the key beneficiaries of petroleum
product pricing reforms. We have a Buy rating on ONGC, OIL and GAIL,
although ONGC may be affected by an overhang from FPO.
No comments:
Post a Comment