February 13, 2017 / 17:06 IST
The government’s decision to deregulate diesel prices was a major positive for OMCs. It led to a decline in crude oil gross under-recoveries, with only kerosene and LPG prices under the regulatory regime. Also, the hike of 25 paise per month in kerosene prices and scheme of direct benefit transfer (DBT) for LPG cylinders has led to lower gross under recoveries.
Outlook
Going forward, we expect stable marketing margins along with ramp up in throughput in stabilised Kochi refinery over the next two years. We have a HOLD recommendation on the stock with a target price of Rs 725 (based on average of P/BV multiple: Rs 635/share and P/E multiple: Rs 814/share).
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