NEW DELHI: The shares of ONGC, Oil India slipped, a day after the finance ministry said that ONGC fuel subsidy outgo will almost double to Rs 47,640 crore this fiscal so that diesel, domestic LPG and kerosene can be sold at below market prices to consumers.
At 10:30 a.m., shares in ONGC were trading 1.06% lower at Rs 266.20 while Oil India Ltd was down 0.3% to Rs 1321.
The finance ministry wants upstream oil and gas producers like ONGC to meet one-third of the Rs 1,70,140 crore revenue loss that was projected prior to the June fuel price hike and duty cuts instead of about Rs 1,14,084 crore actual loss the retailers may suffer on selling fuel below cost this fiscal.
Upstream oil firms bear one-third of the revenue that retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates. A similar amount is contributed by the government by way of cash subsidy while the rest is either absorbed by the retailers or passed on to consumers.
Commenting on the higher subsidy burden, TK Anant Kumar, Director Finanace, Oil India said, 'We have not heard from the government on higher subsidy burden for upstream companies'.
According to reports, the finance ministry wants upstream share to be fixed at Rs 56,707 crore or one-third of the revenue loss estimated before the June price hike and cut in customs and excise duty. Of this, ONGC's share would be Rs Rs 47,640 crore and the rest would be split between Oil India and GAIL India.
Analyst Call:
Rahul Singh of Standard Chartered Securities said, "Market is definitely worried about the uncertainty or lack of clarity on the subsidy burden on ONGC."
According to our estimates, "ONGC share have factored in a $54 long-term net realization which is lower than what they made in FY11," added Rahul.
"ONGC is available at a cheap valuation and reflect most of the risk spoken about the stock in the market," said Rahul.
Standard Chartered Securities maintains outperform for both ONGC and Oil India Ltd, factoring in all the risk in both the stock.
ROHIT KALIA
PGDM 3RD SEM
At 10:30 a.m., shares in ONGC were trading 1.06% lower at Rs 266.20 while Oil India Ltd was down 0.3% to Rs 1321.
The finance ministry wants upstream oil and gas producers like ONGC to meet one-third of the Rs 1,70,140 crore revenue loss that was projected prior to the June fuel price hike and duty cuts instead of about Rs 1,14,084 crore actual loss the retailers may suffer on selling fuel below cost this fiscal.
Upstream oil firms bear one-third of the revenue that retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates. A similar amount is contributed by the government by way of cash subsidy while the rest is either absorbed by the retailers or passed on to consumers.
Commenting on the higher subsidy burden, TK Anant Kumar, Director Finanace, Oil India said, 'We have not heard from the government on higher subsidy burden for upstream companies'.
According to reports, the finance ministry wants upstream share to be fixed at Rs 56,707 crore or one-third of the revenue loss estimated before the June price hike and cut in customs and excise duty. Of this, ONGC's share would be Rs Rs 47,640 crore and the rest would be split between Oil India and GAIL India.
Analyst Call:
Rahul Singh of Standard Chartered Securities said, "Market is definitely worried about the uncertainty or lack of clarity on the subsidy burden on ONGC."
According to our estimates, "ONGC share have factored in a $54 long-term net realization which is lower than what they made in FY11," added Rahul.
"ONGC is available at a cheap valuation and reflect most of the risk spoken about the stock in the market," said Rahul.
Standard Chartered Securities maintains outperform for both ONGC and Oil India Ltd, factoring in all the risk in both the stock.
ROHIT KALIA
PGDM 3RD SEM
No comments:
Post a Comment