Event Update
(January 18, 2013)
Event Update
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Oil & Gas
Big step towards small hikes, follow-up crucial
· Oil marketing companies (OMCs) allowed to increase diesel prices by 50 paise/litre per month. Govt increases LPG cylinder cap from 6 to 9
· Net annual savings of Rs228bn from diesel price hikes, free pricing for bulk sales and rise in LPG cylinder cap
· Although we like ONGC/Oil India, we believe amongst these ONGC is the best play on pricing reforms given its size and consolidated production growth by FY15
· Within OMCs HPCL more leveraged to pricing reforms, though believe BPCL a safer bet given cushion from upstream valuations
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