INSUBCONTINENT EXCLUSIVE:
Oil marketing companies and upstream production companies are likely to re-rate in 2020 as the privatisation 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 Organization and Bharat Stage VI emission 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
It has retained buy ratings on Reliance Industries, state-owned oil marketing companies and ONGC
The brokerage said RIL, BPCL, ONGC, and GAIL are its most favoured stocks.
RELIANCE INDUSTRIESCMP In : Rs 1547.70
Rating/Target Price: Buy/
Rs 1750
Refining complex upgrades were completed ahead of schedule for IMO 2020, with the petcoke gasifier also under stablisation, said UBS
Petrochemical margins face near-term headwinds; however, feedstock flexibility and integration are providing some respite, it said
The brokerage expects re-organisation 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 In : Rs 470.25
Rating/Target Price:
Buy/ Rs 600
BPCL has prepared ahead of schedule for IMO 2020 and will benefit from higher complexity and widening light-heavy differentials,
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 privatisation could provide a significant upside case, said UBS.
ONGCCMP In : Rs 124.10
Rating/Target Price: Buy/ Rs 200
The
brokerage estimates that ONGC is discounting nearly $50 per barrel Brent and has been trading significantly below long-term valuation
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 In: Rs 125.40
Rating/Target Price: Buy/ Rs 160
The 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