Share Price of oil & gas companies shot up on Thursday after the government doubled the price of natural gas produced by ONGC and Oil India from nomination blocks.
The government raised administered price mechanism (APM) gas price to $4.20 per unit atpar with Reliance Industries’ KG-D6 gas price, discovered on the basis of market principles.
ONGC and OIL India will get USD 3.82/mmbtu price for the gas. 10% will be the royalty on this, taking the gross price at USD 4.2/mmbtu. This change in APM prices is positive for ONGC. Assuming realisation of ~USD 4.2/mmbtu (gross), EPS impact will be Rs 18/share and SOTP impact will be Rs 150/share. Shares of Oil India touched a high of Rs 1270 and low of Rs 1220.80.
GAIL India may allow charging marketing margin on supply of gas. If it is allowed to charge marketing margin on gas from the nominated field, EPS impact will be positive Rs 1.8/share and SOTP impact will be ~Rs 15-16/share. Shares of GAIL India moved 2.61 per cent higher at Rs 443.50. The stock touched a high of Rs 453.35 and low of Rs 436.20.
However, this step will make the fuel used in automobiles and households in Mumbai and National Capital Region of Delhi costlier by 20-35%.
Company like Indraprastha Gas which are engaged in supply of gas to petrol pumps and residences are expected to take a hit on the negative side due to higher prices. Shares of Indraprastha Gas were at Rs 228.30, down 5.50 per cent. The scrip hit a low of Rs 215.10 and high of Rs 285 in trade so far.
These companies will eventually to pass on the price-hike to end customers. However, this is expected to be in a phased manner and leave a dent in their balance-sheets.
Comments
Post a Comment
Please comment on my blog or drop a twitter msg.