The global economy has been affected by the ongoing Euro-zone debt crisis and slowdown in China and India on account of anti-inflationary policies. To our mind, a slowdown in global economy would lead to a fall in crude oil prices which bodes well for India’s Oil and Gas sector as it would lead to lower under recoveries. However, the fragile political situation in the Middle East and the ongoing tensions between Iran and US could lead to spike in crude oil prices on account of high risk premium. This could have serious implications for the India’s Oil and Gas sector which is already reeling under record high under recoveries.
The ongoing efforts by the gas sector regulator to control marketing margins and regulate tariffs have affected the valuations of companies operating in this sector. Further, the fall in domestic gas production on account of inability of RIL to increase production at its KG D6 fields has led to increase in imports of high priced LNG, thus increasing costs for gas suppliers and consumers.
Companies
|
CMP
|
Price Target
|
Reco
|
RIL
|
799
|
803
|
NEUTRAL
|
ONGC
|
286
|
335
|
BUY
|
OIL
|
486
|
578
|
BUY
|
CAIRN
|
330
|
343
|
NEUTRAL
|
IOC
|
254
|
276
|
NEUTRAL
|
BPCL
|
346
|
363
|
NEUTRAL
|
HPCL
|
318
|
329
|
NEUTRAL
|
GAIL
|
375
|
430
|
BUY
|
PLNG
|
154
|
182
|
BUY
|
IGL
|
266
|
319
|
BUY
|
GGCL
|
305
|
289
|
SELL
|
GSPL
|
72
|
89
|
BUY
|
Thanks & Regards
Chirag Dhaifule, CFA
Equity Research Analyst
LKP Securities
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