INSUBCONTINENT EXCLUSIVE:
Mumbai: Oil marketing companies and upstream companies are likely to re-rate in 2020 as privatization theme picks up and there is sustained
strength in marketing business performance, said foreign brokerage UBS
Moreover, refining margins are likely to recover due to International Maritime Organisation norms 2020 and Bharat Stage VI norms, it said
Gas transmission businesses could recover with higher availability of domestic gas and liquefied natural gas, said UBS
The brokerage has upgraded GAIL India to buy and downgraded Gujarat Gas and Mahanagar Gas to sell
UBS has retained buy ratings on Reliance Industries, oil marketing companies and Oil - Natural Gas Corporation
The brokerage said RIL, BPCL, ONGC, and GAIL are its most favoured stocks:
Reliance IndustriesCMP: Rs 1,547.70Rating/Target Price:
Buy/1,750Refining complex upgrades were completed ahead of schedule for IMO 2020, with the petcoke gasifier also under stablisation, said
Petrochemical margins face near-term headwinds; however, feedstock flexibility and integration are providing some respite, it said
The brokerage expects re-organization of Jio and the digital platform strategy to be a compelling investment proposition
UBS expects retail segment performance to remain strong with robust margins
The
company remains on track towards deleveraging and right-sizing the balance sheet, said UBS
BPCLCMP: Rs 470.25Rating/Target Price: Buy/600BPCL has prepared ahead of schedule for IMO 2020 and will benefit from higher complexity and
widening light-heavy differentials, said UBS
The brokerage said its superior marketing performance is reflected in its stable market share and highest throughput per outlet among
state-owned oil marketing companies
Strategic privatization could provide
a significant upside case, said UBS
ONGCCMP: Rs 124.10Rating/Target Price: Buy/200The brokerage estimates that ONGC is discounting nearly $50 per barrel Brent and has been
trading significantly below long-term valuation multiples
The fundamentals remain strong, driven by a stable oil price outlook, no cooking fuel
subsidy burden and diversification of earnings from
downstream investments, said UBS
GAILCMP: Rs 125.40Rating/Target Price: Buy/160The brokerage expects GAIL's earnings tol rebound with increased volume from the gas
transmission and marketing segments, as well as a recovery of the commodity segment
Major pipeline projects, including the Urja Ganga project and the Kochi-Mangalore pipeline, are coming online in FY21-22, said UBS
The brokerage expects the petchem and LPG segments to return to higher profitability as of FY21-22, as commodity prices seem to have