HSBC downgrades Reliance Industries to 'neutral'
HSBC has downgraded energy major Reliance Industries to "neutral" from "overweight" and cut the price target to Rs 1,040 from Rs 1,084, citing media reports of federal investigation agency's probe into possible dealing between Indian energy companies and the oil ministry.
June 16, 2011 / 15:25 IST
HSBC has downgraded energy major Reliance Industries to "neutral" from "overweight" and cut the price target to Rs 1,040 from Rs 1,084, citing media reports of federal investigation agency's probe into possible dealing between Indian energy companies and the oil ministry.
The Comptroller and Auditor General's (CAG) report said Reliance had inflated development costs on its D6 block in the Krishna-Godavari basin, two Indian newspapers reported on Monday.The investigation could result in a freezing of bureaucratic decision making, which would hamper Reliance's ability to carry out exploration and production activities effectively in its blocks, HSCB said in a note."We fear the standoff could linger due to already raging controversy related to allocation of 2G spectrum that was brought to the fore by another Comptroller and Auditor General report," it said.Reliance Industries has underperformed the benchmark Sensex by 12 percent over the last three months on concerns of falling gas production from its KG-D6 block, off the Indian eastern coast, HSBC added. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
