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India Oil &Gas
2Q FY12F results preview
Likely another dismal quarter; muted q-q growth; OMCs may bleed again
Oil and petchem prices moderate, refining margins stay firm
Oil prices remained range-bound during the quarter before coming off
towards the end, owing to increasing global macro concerns. Brent prices
were down 4% q-q in 2Q. Singapore complex refining margins firmed up in
Aug/Sept after consecutive months of decline in June/July (overall up 5%
q-q), on strengthening gasoline cracks. After a sharp run-up last year, key
petchem prices and margins have seen some correction in the past few
months. Sharp rupee depreciation towards the end of the quarter (rupee
down 10% q-q on exit) was a key highlight of 2Q.
No respite for OMCs – Likely hit from large U/Rs, inventory/FE losses
Post the fuel price hikes and duty cuts in June 2011, gross underrecoveries
are likely to decline by ~50% q-q, in our view, but these still
remain high. Likely sharing remains unclear and a concern. We assume
33% / 50% sharing by upstream / government. However, if the government
delays or provides lesser support (34% in 1QFY12, we assume 50% for
2Q), OMCs could once again report losses (similar to 1Q).
We expect dismal 2Q results
Despite an improvement in regional refining margins, we expect RIL to
report muted growth (up 1% q-q). After five consecutive quarters of
sequential PAT growth, Cairn India is likely to report a sharp 81% q-q
decline in PAT in 2Q due to cost-recoveries on royalty and resulting one-off
provisions (our est. INR17.3bn). Gas volumes are likely to remain flat q-q
and we do not expect any big surprises in gas companies’ earnings q-q,
aside from IGL, where we expect 28% y-y and 6% q-q growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Oil &Gas
2Q FY12F results preview
Likely another dismal quarter; muted q-q growth; OMCs may bleed again
Oil and petchem prices moderate, refining margins stay firm
Oil prices remained range-bound during the quarter before coming off
towards the end, owing to increasing global macro concerns. Brent prices
were down 4% q-q in 2Q. Singapore complex refining margins firmed up in
Aug/Sept after consecutive months of decline in June/July (overall up 5%
q-q), on strengthening gasoline cracks. After a sharp run-up last year, key
petchem prices and margins have seen some correction in the past few
months. Sharp rupee depreciation towards the end of the quarter (rupee
down 10% q-q on exit) was a key highlight of 2Q.
No respite for OMCs – Likely hit from large U/Rs, inventory/FE losses
Post the fuel price hikes and duty cuts in June 2011, gross underrecoveries
are likely to decline by ~50% q-q, in our view, but these still
remain high. Likely sharing remains unclear and a concern. We assume
33% / 50% sharing by upstream / government. However, if the government
delays or provides lesser support (34% in 1QFY12, we assume 50% for
2Q), OMCs could once again report losses (similar to 1Q).
We expect dismal 2Q results
Despite an improvement in regional refining margins, we expect RIL to
report muted growth (up 1% q-q). After five consecutive quarters of
sequential PAT growth, Cairn India is likely to report a sharp 81% q-q
decline in PAT in 2Q due to cost-recoveries on royalty and resulting one-off
provisions (our est. INR17.3bn). Gas volumes are likely to remain flat q-q
and we do not expect any big surprises in gas companies’ earnings q-q,
aside from IGL, where we expect 28% y-y and 6% q-q growth.
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