Nomura Financial Advisory and Securities positive on GAIL and RIL. ''Among oil PSUs, we prefer OMCs (vs. upstream oil PSUs). PLNG is our preferred pick among mid-cap gas names,'' it said.
''GAIL's Q3 was its best ever; we think Q4 will be even better. We expect EBITDA will increase 14% q-q (123% y-y), driven by gas transmission (higher volume), LPG (no subsidy and higher realizations early in the quarter), and petchem (higher sales volume and prices, but offset by higher gas cost due to the cut in domestic gas allocation). For Petronet LNG, Q3 was the weakest in three years. We expect a 12% q-q rise in EBITDA driven by a 5% tariff increase and marginally higher utilization (97%) at Dahej,'' said Nomura.
''For Reliance, we expect improved refining GRM of USD 8.7/bbl (vs 7.6/bbl in Q3), which will help negate the impact of further weak petchem (particularly aromatics). We estimate RIL's PAT to be Rs 56.5 billion (up 3% q-q). For CAIR, we estimate a 3% q-q EBITDA rise due to a 2% rise in volume (190 kboepd) in the RJ block.''
''There is much less uncertainty on the subsidy for Q4 this year. The government cash support is already announced (Rs 350 billion). Upstream support is also largely known (ONGC/OIL discount at USD 56/bbl, and NIL from GAIL). We estimate OMCs to have over-recovery of Rs 109 billion in Q4 and net under-recovery of Rs 60 billion for FY14F. Similar to recent years, high over-recovery should enable optically strong Q4 numbers for OMCs. Typically, ONGC and Oil India have weak Q4 due to higher write-offs. We expect Oil India's Q4 to be particularly weak due to 12% lower oil volume due to the law and order situation in the North East,'' it added.
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