THE Indian petroleum players are expected to report healthy growth numbers for the September 2010 quarter although several key concerns remain. The numbers public sector oil companies report will continue to hinge on how much subsidy the government apportions to each of them and how much it decides to bear itself. Stable oil prices during the quarter and the deregulation of petrol and natural gas prices by the government bode well for these companies.
For Reliance Industries, India’s largest company by market capitalisation, the performance is expected to be significantly better compared with the year-ago period, although it could be lacklustre vis-a-vis the June 2010 quarter performance. A marginal improvement in the refining margins during the quarter is expected to bring back cheers for the refiner. On the other hand, pressure on petrochemical margins and stagnant oil and gas production will restrict its upside. “September 2010 is expected to be a subdued quarter for RIL on a QoQ basis due to weakness in petrochemicals margins and lower contribution from E&P segment due to lower volumes at Panna-Mukta-Tapti, and flat gas volumes at KG-D6,” said a Motilal Oswal report, which predicted a 29.6% y-o-y growth in net profits.
ONGC’s numbers for the quarter are also likely to show healthy growth. However, it won’t be due to any production increase, but on account of the reduced subsidy burden and deregulated APM gas price. “ONGC is likely to report average crude realisation of $78.4/bbl at the gross level; we expect the company to bear subsidy of $15.6/bbl leading to net realisation of $62.8/bbl,” Angel Broking’s report on the results expectations said. Natural gas companies such as Gail, GSPL, Indraprastha Gas and Gujarat Gas are likely to witness flat volumes compared with earlier quarters. However, Gail will benefit from the additional marketing margins from sale of APM gas. Petronet LNG is set to report higher volumes thanks to import of spot LNG cargos to meet the rising demand.
The outlook for the sector remains mixed. The overcapacity situation in the refining industry remains uncorrected, which can lead to sustained pressure on the gross refining margins. Even petrochemicals and polymers will face margin pressure due to increasing lowcost production from the Middle East.
For Reliance Industries, India’s largest company by market capitalisation, the performance is expected to be significantly better compared with the year-ago period, although it could be lacklustre vis-a-vis the June 2010 quarter performance. A marginal improvement in the refining margins during the quarter is expected to bring back cheers for the refiner. On the other hand, pressure on petrochemical margins and stagnant oil and gas production will restrict its upside. “September 2010 is expected to be a subdued quarter for RIL on a QoQ basis due to weakness in petrochemicals margins and lower contribution from E&P segment due to lower volumes at Panna-Mukta-Tapti, and flat gas volumes at KG-D6,” said a Motilal Oswal report, which predicted a 29.6% y-o-y growth in net profits.
ONGC’s numbers for the quarter are also likely to show healthy growth. However, it won’t be due to any production increase, but on account of the reduced subsidy burden and deregulated APM gas price. “ONGC is likely to report average crude realisation of $78.4/bbl at the gross level; we expect the company to bear subsidy of $15.6/bbl leading to net realisation of $62.8/bbl,” Angel Broking’s report on the results expectations said. Natural gas companies such as Gail, GSPL, Indraprastha Gas and Gujarat Gas are likely to witness flat volumes compared with earlier quarters. However, Gail will benefit from the additional marketing margins from sale of APM gas. Petronet LNG is set to report higher volumes thanks to import of spot LNG cargos to meet the rising demand.
The outlook for the sector remains mixed. The overcapacity situation in the refining industry remains uncorrected, which can lead to sustained pressure on the gross refining margins. Even petrochemicals and polymers will face margin pressure due to increasing lowcost production from the Middle East.
No comments:
Post a Comment