Oil & Gas – Indian Gas Sector

Over the next 12 months, margins and/or volumes for listed gas companies will likely remain muted as the companies try to navigate the challenging macro environment of higher prices for both domestic and LNG, we believe. We, however, see the fall in stock prices across the gas universe as an excellent opportunity to invest in high-quality businesses with strong growth prospects.

We believe despite higher LNG prices, city gas distribution (CGDs) companies such as Indraprastha Gas (IGL), Gujarat Gas (GGL) and Mahanagar gas (MGL) will gradually adjust to the new normal and margins will normalise over FY23-24E

For the first time in decades, the price differential between petrol, diesel and compressed natural gas (CNG) has narrowed thanks to the ₹21-25 per kg spurt in prices the city gas distribution (CGD) companies have taken in the last six months. In comparison, petrol and diesel prices have gone up by ₹10 per litre. CNG has often prided itself to be the cheaper and cleaner alternative to petrol and diesel with the difference between CNG per kg and petrol per litre normally being in the range of ₹30-40, at times ₹50-60 considering state taxes. But with expensive LNG, the difference between the automotive fuels is narrowing and CNG is becoming costlier. CGD companies Indraprastha Gas, Mahanagar Gas and Gujarat Gas have taken large increases in CNG prices. CNG price in Delhi now is ₹71.61/kg and in Mumbai it is ₹72/kg and in Gujarat it is ₹79.56/kg. Petrol in Delhi now costs ₹105.41 per litre, while diesel rate is ₹96.67 a litre.

POINTS TO PUT ON NOTE IN COMING WEEKS

  • Broken demand supply balance
  • Significance of volume growth to margin realities
  • Valuation at attractive levels in oil & gas sectors

OUR PICK FROM THE OIL & GAS SECTORS ARE:

  • GAIL
  • MGL
  • IGL
  • GUJGAS LTD

For Detailed Analysis One Can Have A Look On Such Segment From Our Expert:
https://www.youtube.com/watch?v=C4skWmmYrKQ

THE TECHNICAL ANALYSIS OF THE ABOVE STOCKS ARE AS:

GAIL
IGL
GUJGASLTD
MGL

PUSHKAR ANAND (THE BOURSE ACADEMY)

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