Oil & Gas sector results preview for Q4FY12: Emkay
Emkay Global Financial Services has come with its March quarterly earning estimates for Oil & Gas sector. According to the research firm, post budget there has been some clarity on subsidy sharing mechanism as far as Q4 FY12 is concern.
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Oil & Gas sector results preview for Q4FY12: Emkay
Emkay Global Financial Services has come with its March quarterly earning estimates for Oil & Gas sector. According to the research firm, post budget there has been some clarity on subsidy sharing mechanism as far as Q4 FY12 is concern.
Like this story, share it with millions of investors on M3
Oil & Gas sector results preview for Q4FY12: Emkay
Emkay Global Financial Services has come with its March quarterly earning estimates for Oil & Gas sector. According to the research firm, post budget there has been some clarity on subsidy sharing mechanism as far as Q4 FY12 is concern.
Emkay Global Financial Services has come with its March quarterly earning estimates for Oil & Gas sector. According to the research firm, post budget there has been some clarity on subsidy sharing mechanism as far as Q4 FY12 is concern.
For Q4FY12, under-recoveries on sale of HSD, SKO and LPG have increased to Rs.430bn as against Rs.310bn in Q3FY12. On QoQ under-recoveries have increased by 38% on account of higher crude oil prices (Averaged Brent oil at USD118/bbl v/s USD109/bbl). Post the budget there has been some clarity on subsidy sharing mechanism as far as Q4 FY12 is concern. Hence for our estimates, we assume 38% sharing for Q4FY12 under recovery by upstream companies (Rs.163bn).
During the quarter, the benchmark refining margins increased to USD7.7/bbl, compared to USD6.25/bbl in 3QFY12 mainly on account of recovery in gasoline, LPG and naphtha cracks. However petchem margins have declined sequentially during the quarter on the back of weak global demand.
For RIL, we factor in lower GRMs for YoY and QoQ at USD6.6/bbl, on the back of decline in Diesel and light-heavy crude oil differential. Difference between Dubai and Arab Heavy has turned negative during the quarter effectively leading to higher crude cost for RIL. Dubai – Arab Heavy differential declined from USD2.5/bbl in Sept11Qtr to flat in Dec11Qtr to -USD1/bbl in March12Qtr. Petchem margins have also declined on QoQ basis and we factor in about 15% decline in petchem margins. We factor in lower gas production from KG basin at 36.5mmscnd from 40.9mmscmd in Q3FY12. Our net profit estimate for Q4FY12E stands at Rs40.1bn a decline of 10% QoQ and 25% YoY.
Natural Gas universe likely to report revenue and profit growth of 33.5% and 3.9% YoY, respectively, primarily driven by higher realisation from Petronet LNG, IGL and Gujarat Gas. Natural gas universe likely to report EBIDTA growth of 10.8% YoY.
In CGD space, we believe IGL and Gujarat gas would report better margin on the back of A) softening in spot LNG Prices and B) Rupee appreciation, resulting in lower gas cost and higher profitability.
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