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Jul 12, 2012, 02.20 PM IST
Motilal Oswal has come out with its report on oil & gas sector. The research firm maintains neutral rating on Reliance Industries, GAIL and GSPL.
Motilal Oswal has come out with its report on oil & gas sector. The research firm maintains neutral rating on Reliance Industries , GAIL and GSPL .
Brent continued to ease amid demand concerns: Brent prices averaged USD96/bbl (-14% MoM) in Jun-12, the lowest in last eighteen months. Deepening of Eurozone debt crisis, weak macroeconomic data from US and China and reduced anxiety over supply disruptions as Iranian supply get replaced by other OPEC countries led to the weakening in oil prices.
Singapore GRM down 16% MoM to USD5.6/bbl in Jun-12: Sharp decline in light distillate spreads led to 16% MoM decline in GRM to USD5.6/bbl. Gasoline spread was down 37% MoM led by lower demand from Indonesia and rising exports from India and Taiwan. Naphtha spread was down 47% MOM to USD-13.1/bbl led by lower Petchem demand and higher supplies from India and Middle East.
Both polymer and polyester margins up: Domestic PE and PP margins were up 10-12% MoM led by 15% decline in Naphtha prices. PVC margin was up 37% MoM led by anticipation of demand growth from construction sector in US and Asian developing nations. Integrated polyester margins were up 14-15% led by lower feedstock costs.”
Valuation and view: Lower crude oil prices and likely price hikes in controlled products are the key positives for Oil PSU's. We prefer BPCL among OMC's due to its strong E&P potential and upstream companies, ONGC and Oil India, due to their attractive valuations. Maintain Neutral on RIL due to subdued outlook on refining and Petchem business. Neutral on GAIL and GSPL due to headwinds on incremental gas availability. However, domestic gas scarcity augurs well for Petronet LNG but high LNG prices would dent demand.
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May 22 2013, 10:28
- in Technicals
May 22 2013, 10:44
- in Economy