RIL, IGL and Gujarat Gas among preferred oil & gas stocks by Sharekhan
The earnings trajectory of upstream PSUs is expected to improve in the coming quarters supported by a sharp rally in oil price and potential hike of 50-60% in domestic gas price for H2FY2022, said the brokerage
Sharekhan maintained its 'constructive' stance on the City Gas Distribution (CGD) players given their strong volume-led earnings growth visibility, high RoEs, debt-free status and robust FCF generation. The earnings trajectory of upstream PSUs is expected to improve in the coming quarters supported by a sharp rally in oil price towards ~ USD 70/bbl and potential hike of 50-60% in domestic gas price for H2FY2022. Broking house prefers Reliance Industries (RIL), Gujarat Gas, Mahanagar Gas (MGL), Indraprastha Gas (IGL), and Gujarat State Petronet (GSPL) in the oil & gas space.
Reliance Industries | Rating: Buy | LTP: Rs 2,171.55 | Target: Rs 2,400 | Upside: 10 percent | Broking firm have lowered the FY2022 earnings estimate to factor in weak retail performance in Q1FY2022 and have largely maintained FY2023 earnings estimates. (Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)
Mahanagar Gas | Rating: Buy | LTP: Rs 1,125.95 | Target: Rs 1,450 | Upside: 28 percent | Broking house maintained FY2022-2023 earnings estimates given the expectation of a fast volume recovery in coming quarters.
Indian Oil Corporation | Rating: Buy | LTP: Rs 106.10 | Target: Rs 125 | Upside: 18 percent | Brokerage house increased FY2022-FY2023 earnings estimates to factor in higher petchem and marketing margins, partially offset by slightly lower refinery utilisation rate.
Bharat Petroleum Corporation | Rating: Buy | LTP: Rs 463.45 | Target: Rs 520 | Upside: 12 percent | Sharekhan maintained FY2022-FY2023 earnings estimates given expectation of improvement in marketing volumes and likely cyclical GRM recovery.
Hindustan Petroleum Corporation | Rating: Buy | LTP: Rs 253.65 | Target: Rs 340 | Upside: 34 percent | Sharkhan fine-tuned FY2022 earnings estimates and increased FY2023 earnings estimate to factor in higher auto fuel marketing margins.
Gujarat Gas | Rating: Buy | LTP: Rs 725.60 | Target: Rs 890 | Upside: 22 percent | Sharehan maintained its FY2022-FY2024 earnings estimates of the company.
Gujarat State Petronet | Rating: Buy | LTP: Rs 372.45 | Target: Rs 410 | Upside: 10 percent | Research house maintained the FY2022- FY2023 earnings estimates.
Indraprastha Gas | Rating: Buy | LTP: Rs 528.40 | Target: Rs 650 | Upside: 23 percent | Sharekhan maintained FY2022- FY2023 earnings estimate as we expect a strong volume recovery in the coming quarters.