Bet on Coal India, Indian Oil, says Ambit Capital

Saurabh Mukherjea, Head of Equities of Ambit Capital said he would bet on Coal India, Indian Oil as stock prices should do well in the next six months.
Mukherjea told CNBC-TV18, “I think one of the better things to be talking about is the government deregulation of fuel prices. We have got a good six-seven months visibility that we will see fuel prices rising for sometime to come. Indian Oil is the disinvestment candidate for next year.”
 
“My reckoning is whilst all three, oil marketing companies (OMCs) - Indian Oil, Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) will see their profit & loss (P&L) benefit from diesel prices going up. Indian Oil is the one I would stick to. As there is a very strong incentive for the powers that be in our country to get this P&L sorted out before that 10 percent stake is sold,” Mukherjea added.
 
Mukherjea also said, “We will get a disinvestment target somewhere around Rs 40,000-50,000 crore in FY14 budget. It will be a fairly punchy disinvestment target. The government has taken a lot of heart from how successfully the disinvestment has gone this fiscal. Out of the various candidates that they line up for disinvestment, my best bets would be Indian Oil.”
 
“I will also be looking at Coal India quite carefully. In the run up to the elections next year we all know the imperative that the government faces to jack up coal production and get coal price pooling going and resurrect the coal production scenario in our country.”
 
“My sense is the competition commission of India (CCI) will make a few announcements going forward. This will help Coal India’s share price. Then I think you will get a 10 percent disinvestment in Coal India next year. If I had to choose two I will go for Indian Oil and Coal India. They are not only critical for the country’s energy scenario, but also from a fiscal perspective that is a lot of money for the government. 10 percent of Indian Oil and Coal India each will be juicy disinvestments. I think those companies stock prices should do well in the next six months,” Mukherjea.