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Crude traps sector and government likely to
rescue in Q4FY12
Crude maintained its momentum with an average of
US$118.6/bbl (Brent) during Q4FY12 amidst rising
concerns over Iranian oil embargo by the EU. Crude has
now stabilised between US$120/bbl and US$125/bbl and
there seems to be no triggers for it to climb down in the
near term. GRMs demonstrated illusive recovery in the
month of January, yet took a beating in the month of
March and thus averaged lower QoQ albeit marginally at
US$7.7/bbl in Q4. Devoid of any price hikes in retail fuels
under-recoveries skyrocketed and is expected to be about
Rs448bn. We believe the government will rescue the
beleaguered OMCs with cash subsidies while the upstream
is likely to provide support despite hurting its own
profitability. Gas utilities are likely to report stable
performance amidst the crude turmoil.
Crude averages at US$119/bbl: Amidst the Iranian oil
embargo by the EU, crude rose and averaged US$119/bbl
in Q4. Iranian production is expected to have declined by
about 300,000bpd thus putting pressure on supplies
although Libyan output has increased. Crude is not likely
to decline in the near term due to the Iranian issue.
Illusive recovery in GRMs: Reuters Singapore Complex
GRMs which witnessed recovery in the month of January
declined in the month of February with further decline in
the month of March and averaged marginally lower QoQ
at US$7.7/bbl during Q4FY12.
Under-recoveries scale higher at Rs448bn: Devoid of
price hikes in regulated fuels, under-recoveries scaled up
further to an estimated Rs448bn in Q4. However, the
OMCs are expected to be adequately compensated
through upstream subsidies and cash from the
government.
Crude estimate and rupee-dollar exchange rate for
FY13E and FY14E revised: We have revised our crude
price assumption to US$120/bbl and US$110/bbl and
rupee-dollar exchange rate to Rs50/US$ to Rs48/US$ for
FY13E and FY14E respectively. Incorporating these
changes we have revised our estimates for RIL, Cairn,
Gujarat Gas, Petronet LNG and IGL with subsequent
changes in our target price and recommendation
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Crude traps sector and government likely to
rescue in Q4FY12
Crude maintained its momentum with an average of
US$118.6/bbl (Brent) during Q4FY12 amidst rising
concerns over Iranian oil embargo by the EU. Crude has
now stabilised between US$120/bbl and US$125/bbl and
there seems to be no triggers for it to climb down in the
near term. GRMs demonstrated illusive recovery in the
month of January, yet took a beating in the month of
March and thus averaged lower QoQ albeit marginally at
US$7.7/bbl in Q4. Devoid of any price hikes in retail fuels
under-recoveries skyrocketed and is expected to be about
Rs448bn. We believe the government will rescue the
beleaguered OMCs with cash subsidies while the upstream
is likely to provide support despite hurting its own
profitability. Gas utilities are likely to report stable
performance amidst the crude turmoil.
Crude averages at US$119/bbl: Amidst the Iranian oil
embargo by the EU, crude rose and averaged US$119/bbl
in Q4. Iranian production is expected to have declined by
about 300,000bpd thus putting pressure on supplies
although Libyan output has increased. Crude is not likely
to decline in the near term due to the Iranian issue.
Illusive recovery in GRMs: Reuters Singapore Complex
GRMs which witnessed recovery in the month of January
declined in the month of February with further decline in
the month of March and averaged marginally lower QoQ
at US$7.7/bbl during Q4FY12.
Under-recoveries scale higher at Rs448bn: Devoid of
price hikes in regulated fuels, under-recoveries scaled up
further to an estimated Rs448bn in Q4. However, the
OMCs are expected to be adequately compensated
through upstream subsidies and cash from the
government.
Crude estimate and rupee-dollar exchange rate for
FY13E and FY14E revised: We have revised our crude
price assumption to US$120/bbl and US$110/bbl and
rupee-dollar exchange rate to Rs50/US$ to Rs48/US$ for
FY13E and FY14E respectively. Incorporating these
changes we have revised our estimates for RIL, Cairn,
Gujarat Gas, Petronet LNG and IGL with subsequent
changes in our target price and recommendation
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