Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Sector Update - Natural Gas - Kotak

Posted On: 2018-10-05 08:10:50

Half yearly gas price revision - positive for upstream companies

- The government of India/Ministry of petroleum and natural gas, as per the New Domestic Gas Pricing Guidelines, 2014, has revised the price of natural gas, produced domestically.

- With effect from 1st October 2018, the domestic gas price is revised upwards to US$ 3.36/mmbtu (+10%) from US$3.06/mmbtu on Gross Calorific value (GCV). On Net Calorific value (NCV), the domestic gas price is revised upwards to US$3.73/mmbtu from US$3.40/mmbtu.

- Domestic gas prices are calculated by taking weighted average price at Henry Hub of the US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter.

- The revised gas price is applicable from 1st October 2018 till 31st March 2019. As per the new gas pricing formula, gas prices are to be revised every six months.

- Deep-water, Ultra deep water and high Pressure-High Temperature arears: Similarly, with effect from 1st October 2018, the domestic gas price for gas to be produced from discoveries in Deep-water, Ultra deep water and high Pressure-High Temperature arears, is revised upwards to US$ 7.67/mmbtu (+13%) from US$6.78/mmbtu on Gross Calorific value (GCV). On Net Calorific value (NCV), the domestic gas price is revised upwards to US$8.52/mmbtu from US$7.53/mmbtu.

- Upstream companies like ONGC (biggest beneficiary), OIL India and RIL are the key beneficiaries of higher domestic gas prices. Along with this, weaker rupee will further boost its earnings. Every US$1/mmbtu increase in gas price led to increase in ONGC's revenue by Rs.40 bn.

- In August 2018, India's gas production was up by 0.6% yoy to 90 mmscmd supported by higher gas production by ONGC. ONGC gas production rose by 5.6% yoy to 67 mmscmd. Whereas, Oil India's production declined to 7.6 mmscmd (-9% yoy) and production from private players/JVs continued to decline and stands at 16 mmscmd (-12% yoy).

- On the flip side, higher gas price along with weak INR will negatively impact city gas distribution (CGD) companies and may impact margins. IGL has increased CNG prices by 4% to Rs.44.3/ kg and PNG price increased by 4.6% to Rs.29.55/SCM in Delhi. Similarly, MGL has increased the CNG price by 7.5% to Rs.49.61/kg and PNG price by 7.9% to Rs.29.4/scm (slab 1) and by 6.5% to Rs.35/scm (Slab 2) from 1st October 2018 to partly combat higher raw material cost.

- India's total Gas consumption mix: Major consuming sectors are fertilizer (25%), power (18%), CGD (15%), refinery (12%), petrochemicals (6%) sector and balance by others.

- With higher crude oil prices, weak currency and higher domestic gas price, we remain bullish on OIL India (BUY, TP Rs.245).
- Due to higher valuation, we remain SELL on IGL (TP Rs.257/share). However, remains positive on MGL due to attractive valuation (ACCUMULATE, TP Rs. 1030/share).

Shares of Mahanagar Gas Ltd was last trading in BSE at Rs.809.95 as compared to the previous close of Rs. 810.1. The total number of shares traded during the day was 25041 in over 1324 trades.

The stock hit an intraday high of Rs. 816.25 and intraday low of 803.55. The net turnover during the day was Rs. 20278310.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Dhunseri Investments Ltd acquires 4643 shares of Dhunseri Petrochem Ltd through Market Purchase

Pennam Sudhakar disposes 16700 shares of CIGNITI TECHNOLOGIES LTD

SITA DEVI sells shares of MAHAAN FOODS LTD through inter-se transfer

GPT Infraprojects Ltd Bags Order Valued at Rs.81.50 crore

Indian biosimilar market to be worth $40 billion by 2030

Result Update: Mirza International Ltd - BUY - TP Rs.104 - Kotak

Result Update: Asian Granito India Ltd - REDUCE - TP Rs.185 - Kotak

Result Update: Va Tech Wabag Ltd - BUY - TP Rs.378 - Kotak

Result Update: PNC Infratech Ltd - BUY - TP Rs.197 - Kotak

Result Update: KNR Constructions Ltd - BUY - TP Rs.235 - Kotak

Result Update: Talbros Automotive Ltd - BUY - TP Rs.400 - Kotak

Result Update: Sterling Tools Ltd - ACCUMULATE - TP Rs.361 - Kotak

Result Update: Engineers India Ltd - BUY - TP Rs.155 - Kotak

Result Update: Century Plyboards Ltd - BUY - TP Rs.232 - Kotak

Result Update: Eveready Industries India Ltd - BUY - TP Rs.310 - Kotak

Result Update: The Phoenix Mills Ltd - BUY - TP Rs.707 - Kotak

Result Update - Voltamp Ltd - BUY - TP Rs.1320 - Kotak

Result Update: Berger Paints Ltd - SELL - TP Rs.280 - Kotak

Company Visit Note: Ratnamani Metals & Tubes Ltd - NOT RATED - Kotak

Result Update: Insecticides India Ltd - BUY - TP Rs.643 - Kotak

Result Update: Nagarjuna Construction Company Ltd - BUY - TP Rs.135 - Kotak

Result Update: Shankara Building Products Ltd - BUY - TP Rs.1537 - Kotak

Result Update: Dollar Industries Ltd (DIL) - BUY - TP Rs.390 - Kotak

Result Update: Greenply Industries Ltd - ACCUMULATE - TP Rs.161 - Kotak

Result Update: Central Depository Services (India) Ltd - BUY - TP Rs.290 - Kotak

Result Update: Blue Star Ltd - BUY - TP Rs.655 - Kotak

Result Update: Bluedart Express Ltd - ACCUMULATE - TP Rs.2875 - Kotak

Result Update: Mahindra Holidays & Resorts Ltd - BUY - TP Rs.315 - Kotak

Result Update: GHCL - BUY - TP Rs.270 - Kotak

Result Update: NIIT Ltd - BUY - TP Rs.110 - Kotak

Result Update: Quess Corp Ltd - BUY - TP Rs.1072 - Kotak

Result Update: Praj Industries Ltd - REDUCE - TP Rs.108 - Kotak

Result Update: Supreme Industries Ltd - BUY - TP Rs.1205 - Kotak

Granules India Ltd Q2 consolidated PAT climbs to Rs. 60.26 crores

Result Update: Kansai Nerolac Paints Ltd - BUY - TP Rs.485 - Kotak

Result Update: Zensar Technologies Ltd - ACCUMULATE - TP Rs.257 - Kotak

Bajaj Auto Ltd - OPM below estimate; Retain Accumulate - Emkay

Result Update: Bodal Chemicals Ltd - ACCUMULATE - TP Rs.130 - Kotak

Result Update: Kajaria Ceramics Ltd - BUY - TP Rs.500 - Kotak

Result Update: Persistent Systems Ltd - BUY - TP Rs.870 - Kotak

Auto Industry Volume Update: September 2018 - Kotak

Company Visit Note: Jindal Stainless Ltd - NOT RATED - Kotak

Company Update: Bajaj Electricals Ltd - ACCUMULATE - TP Rs.545 - Kotak

Telecom: 2QFY19 preview - no respite - Kotak

Sector Update: Natural Gas - Kotak

Company Update: NBCC (India) Ltd - BUY - TP Rs.95 - Kotak

Sector Update: Paper Industry - Kotak

Management Meet Update: Maharashtra Seamless Ltd - BUY - TP Rs.805 - Kotak

Mid-Year FY19 Bank Outlook: Stress in Non-Corporate Segments - India Ratings and Research

View on proposed banks merger

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2018