Tag: oil marketing companies (OMCs)

Expect market returns of 10-15% in 2019, says Bharat Iyer of JPMorgan

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bharat Iyer, head of India equity research at JPMorgan, spoke to CNBC-TV18 about how markets are likely to behave ahead of general elections and shared his views on select sectors.

“I guess confidence levels (in the market) will return only once the political clarity is there. I think 2019 will be a very volatile year because on the positive side, we are seeing earnings making a comeback at least for the largecaps and this is the way the cycle typically unfolds. The largecap starts delivering earnings and then the midcaps follow through after a lag,” Iyer told CNBC-TV18 on Wednesday.

“Our expectations are market returns of 10-15 percent and we do see areas like banks and OMCs giving you outsize gains,” said Iyer.

Talking about various sectors, he said, “I wouldn’t say there is pain but I think we are at a relatively later stage as far as the business cycle is concerned. Specific to autos, what is not helping is these one of measures – there is insurance now, there will be the new emission norms that come into force. So I think autos is a unique subset that is feeling pressures because of both late cycle issues as well as some regulatory issues. If you look at some of the larger sectors, banks – for example – are doing extremely well, there are some signs of recovery in some select infrastructure areas, I think you should get a margin recovery because input costs have come down meaningfully over the last quarter, so I guess there are positives to look at as well.”

Regarding the promoter issues which have resurfaced in the last three-four months, Iyer said, “These are very company and promoter specific issues and you will have to view it as such. I don’t think it is a very broadbase issue, which will impact large parts of the benchmark. The worst of the liquidity squeeze is over. I think the epicentre of this whole issue was sometime in September-October when everything that could conspire against liquidity went against but after that at the systemic level, we cannot complain about liquidity. I think the Reserve Bank of India (RBI) has gone out of its way in terms of assuring the system of liquidity. In terms of the policy response itself, we should see a change sometime later this week when the monetary policy committee (MPC) gives its announcement, so I think this is not a system problem. I think these are unique issues that are impacting a few promoters or a few companies.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LNG import facility is expected to become double in 2-3 years, says PNGRB

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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DK Sarraf, chairperson of India’s downstream oil and gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB), spoke to CNBC-TV18 about the growth of oil and gas sector in the year and his expectations from 2019.

“Year 2018 was an eventful year so far as PNGRB is concerned. We had completed some of the leftover geographical areas award for the 8th round and then we completed some six areas, which were awarded to GAIL on nomination basis and after that we launched ninth CGD bidding round, which was very big success,” Sarraf said on Friday.

86 geographical areas were offered covering 174 districts of India and which also covered more than 25 percent of Indian population. All these areas were well-subscribed by investors and 406 bids were received. We got a good participation from oil marketing companies (OMCs), the gas companies like GAIL, Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) and also some of the foreign bidders, the private sector participants like Torrent and Adani, so everybody was very much enthusiastic. We also on our side allocated all these areas within one month of receiving the bids, so it was a grand success,” he said.

Talking about the investment outlook, Sarraf said, “As far as the investment is concerned, about Rs 70,000 crore of investment is expected to come from 9th CGD bidding round and about Rs 50,000 crore of investments may come from the 10th CGD bidding round. As far as the pricing of gas is concerned, that does not come within the purview of the PNGRB that is for the government of India to decide and so far as their demand for higher price is concerned, I think that demand is fair because unless the gas price is increased, how the gas production within the country will increase? So many explorations had already been done, gas has been discovered and that gas cannot be produced at such a low price, so that is what Oil and Natural Gas Corporation (ONGC) has been claiming but that doesn’t come within the purview of PNGRB,” said Sarraf.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SP Tulsian initiates buy call on Bajaj Auto, Hero Moto & Eicher Motors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Market expert SP Tulsian spoke to CNBC-TV18 about the current trends in the stocks market and shared his outlook.

Speaking about the partial cut in excise duty on aviation turbine fuel (ATF), he said, “This is not a selling opportunity and if you are an adventurous investor, I don’t think that there is any kind of risks seen because you have to take this call also that the crude cannot sustain beyond these levels after November 6-7 when the mid-term elections will get over in US and then the stands will get known of US also because if the Iran sanctions doesn’t go through and if India keeps buying from Iran, that will be seen as quite positive”.

“I won’t say that that is a sole factor for the crude to get eased out. It all depends on the outcome of the results also of the mid-term in the US on November 6 and that will be a deciding factor. If you take these into accounts, you are approaching for a small holiday season where the fears are seen to be rising and that will be seen positive. Small excise cut in ATF is also seen as a positive step in that direction. So this is the right time to take plunge into all three aviation stocks,” he said.

With regards to the auto stocks, Tulsian said, “We have initiated a buy call on Bajaj Auto, Hero Motocorp and Eicher Motors for the last one week or so post seeing the sales numbers of the month of September”.

“We have been liking Zee Entertainment in the last couple of weeks or so. On Monday, I have said that ahead of the numbers if you want to play safe, one can wait to see the results because nothing seems disappointing for Q1 numbers and along with Q2, the management commentary will be very important and that will give the direction. On a risk reward basis, share seems to have bottomed out and we are seeing good upside potential on the stock price from hereon with a view of next 8-10 months,” said Tulsian.

Have you signed up for Primo, our daily newsletter? It has all the stories and data on the market, business, economy and tech that you need to know. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ashmore Investment expects one more rate hike by RBI this year, three next year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ashwini Agarwal, co-founder and partner of Ashmore Investment Management India LLP, spoke to CNBC-TV18 about the current selloff in the equity market and his takeaways from the Reserve Bank of India (RBI) policy.

“Whether this is a bull market or a bear market is not something that I would like to comment on,” Agarwal said on Monday.

According to Agarwal, market faced a lot of events such as IL&FS default, PSU banks merger, Rana Kapoor’s term at Yes Bank in a short span of time.

“I think what has happened is that in the last two-three weeks, there have been multiple events the market has dealt with whether it is the IL&FS, whether it is the merger of the three public sector undertaking (PSU) banks, whether it was the Yes Bank issue, the sudden realisation that the non-banking financial companies (NBFCs) might have a funding problem on a more sustainable basis and then last week’s oil marketing companies (OMCs) issue as well as a potential disappointment on the Reserve Bank of India (RBI) policy. So if you put all of this together, spate of events which have surprised the markets and I think the market is taking time to adjust to that,” said Agarwal.

“So the real question to ask is how much of this is short-term in nature and how much of this is medium-term in nature in terms of debilitating growth prospects,” he said.

Talking about the quarterly results that will kick-off soon, Agarwal said, “I think the September quarter numbers should be fine and one hopes that the changes that we are seeing in the bond market and the FX market will not have a significant impact on earnings in the next six months, so we will have to just wait and see how this all pans out.”

With regards to the Reserve Bank of India’s rate hike trajectory, Agarwal said, “One should expect one more rate hike from this year followed by three more rate hikes next year. Markets are always about discounting the unknown rather than discounting the known. So in the sense that the known is usually priced in. so I am not worried about rate increases from here if they are of the order of three-four rate increases. I think a lot of that is currently priced in in the carnage that we are seeing in the markets.”

“What has been helping the market so far this year has been the fact that mutual fund (MF) inflows have remained reasonably robust. They have come off from roughly Rs 20,000 crore down to Rs 6,000-7,000 crore but they are still in the positive territory and whether these will turn negative or not is the big question,” he added.

Have you signed up for Primo, our daily newsletter? It has all the stories and data on the market, business, economy and tech that you need to know. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

OMCs hit after govt tells them to absorb Re 1 per litre cost: Here’s what brokerages have to say

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of oil marketing companies tanked on Thursday after the government announced that the OMCs will have to absorb Re 1 per litre cost.

Companies like Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Company Limited (IOCL)  lost a chunk of their market capitalisation.

HPCL lost Rs 4,560 crore, 12.23 percent; BPCL lost Rs7,800 crore, 11 percent and IOCL lost Rs 13,594 crore, 10.50 percent, respectively.

Here’s what brokerages are saying on the fall in oil marketing companies:

HSBC 

Brokerage house HSBC has retained its buy rating on BPCL, IOC and HPCL but said the risks to the near-term earnings have increased. It said that the companies are likely to earn zero margins on auto fuels in the near-term and expect the OMCs to benefit from an upcycle in the diesel margins. “In our base cases, we expect marketing margins to normalise in the next financial year,” the report said.

Goldman Sachs 

Goldman Sachs said that the announcement of the excise cut has confirmed the reversal of deregulation of the fuel retail market and said that this move will pull down the earnings and valuations for the OMCs. The financial house said that out of all the OMCs, HPCL will be the most impacted as it has the highest exposure to the fuel retailing business. The financial house downgraded HPCL and BPCL to sell from buy.

CLSA 

The fuel price cut will bring down the earnings per share (EPS) of the OMCs between 23 and 46 percent, CLSA said.  The ratings agency cut the EPS estimates and target prices for IOC, BPCL and HPCL and have retained a sell rating on these.

Citi

Financial house Citi said the re-imposition of the price controls are an ‘unequivocal negative’ for the oil marketing companies. The financial house cut the target of the three oil marketing companies between 42 and 57 percent and downgraded them from buy to sell. Citi said there is a possibility of a further downside despite the sharp year-to-date underperformance.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow