low-base effect; better days ahead
TRANSCRIPT
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited
Low-base effect; better days ahead
We estimate the O&G sector’s aggregate EBITDA would rise by 3.7x YoY (low base given OMCs'/ONGC’s inventory write-off in Q4FY20) and 11.6% QoQ in Q4FY21 driven by modestly recovering demand. OMCs (IOCL, BPCL, HPCL) are likely to be outliers with 6.2% QoQ EBITDA growth owing to large inventory gains and steady marketing margins.
We estimate RIL’s consolidated EBITDA would rise 9.6% YoY, led by very strong petchem margins in O2C and an EBITDA uptick of 35% YoY in retail due to higher footfall. A 20% YoY surge in oil prices and modest oil/ gas production would power up ONGC’s EBITDA by 1.8x YoY (lower base YoY). EBITDA of city gas distribution companies should surge 40% YoY due to strong margins and QoQ volume recovery.
CGDs QoQ volume likely to rise; GAIL to clock high petchem margin
We estimate IGL’s EBITDA would increase to INR8.71/scm (up 26% YoY) driven by a
CNG price hike in Q4 and the recovery in volumes to pre-covid level, taking the total
volumes to 6.58mmscmd (+10% YoY). Margins of GGL/MGL are likely to remain
robust YoY as well; QoQ recovery in volume demand should somewhat offset the
impact of high LNG prices during the first half of Q4. GAIL’s EBITDA is estimated to
rise 30% QoQ (flat YoY) primarily due to very high petchem margins and a spike in
trading margins, which was led by high spot LNG prices (~2.6x YoY). While PLNG is
likely to clock better volumes, which would fuel EBITDA by 79% YoY (low base effect
in Q4FY20 due to high opex), GSPL’s EBITDA would take a hit of -12.5% YoY on the
back of muted volume demand amid high spot LNG prices.
RIL: O2C and retail likely to recover, but not yet on track
We estimate RIL’s consolidated EBITDA would surge by 9.6% YoY/ 10.6% QoQ led
by strong petchem margins on the back of a modest refining performance, strong
retail (up 35% YoY) led by higher footfalls, and a 37.7% YoY increase in RJio as the
RJio subscribers base would increase to 419mn (from 411mn currently) and ARPU
would decrease to INR139. We estimate GRMs to increase led by better diesel and
gasoline cracks.
Sub Head
FP Table Body
OMCs: Modest marketing margins with high inventory gains
We estimate GRMs (including inventory gains) to increase to USD3.5/4.0/2.5 per
bbl for IOCL/BPCL/HPCL driven in the wake of the increase in oil prices and improved
demand across the slate. These companies should report high inventory gains in
Q4FY21 due to rising oil prices. At the same time, higher petrol/ diesel retail prices
would enhance marketing margins, which is likely to benefit HPCL the most given
its higher exposure to the segment. Outlook: Positive for gas. Top picks: IGL, Gujarat
Gas and MGL
India Equity Research Oil & Gas April 8, 2021
Oil & Gas SECTOR UPDATE
Jal Irani Shubham Mittal +91 (22) 6620 3087 +91 (22) 4063 5459 [email protected] [email protected]
Oil & Gas
Edelweiss Securities Limited
2 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Sub-sectors’ aggregate EBITDA growth in Q4FY21
EBIDTA growth (%)
YoY QoQ
OMC's (HP, BP, IOCL)-Reported NA 6.2
OMC's (HP, BP, IOCL)-Core (24.9) 10.2
City Gas (IGL, MGL, GGL) 39.8 2.3
Gas transmission (GAIL, GSPL) (0.8) 21.1
Gas utility (PLNG) 79.0 (6.5)
Reliance Industries (Reported) 9.6 10.6
Reliance Industries (Core) (8.5) 10.6
ONGC (Reported) NA 26.9
ONGC (Core) 23.3 26.9
Aggregate (Core) (6.3) 13.2
Source: Edelweiss Research
Q4FY21E industry assumptions
Q4FY21E Q3FY21 Q4FY20
Brent ($/bbl) 61.3 45.3 50.8
USD/INR 72.9 73.8 72.4
Singapore GRM ($/bbl) 1.8 1.2 1.2
OMC's Marketing margins (INR/ltr) 4.0 4.2 4.5
OMC's Oil Product Sales (MMT) 40.3 40.8 39.1
ONGC Gas Production (BCM) 5.9 5.8 6.0
ONGC Oil Production (MMT) 5.7 5.6 5.8
PLNG Dahej Utilisation 95.0% 97.9% 90.8%
Source: Edelweiss Research, Company
Q4FY21E industry assumptions
QoQ% YoY%
Brent ($/bbl) 35.5 20.7
USD/INR (1.2) 0.7
Singapore GRM ($/bbl) 45.1 50.7
OMC's Marketing margins (INR/ltr) (4.7) (12.4)
Oil Product Sales (MMT) (1.1) 3.0
Gas Production (BCM) 2.2 (1.7)
Oil Production (MMT) 0.4 (2.8)
PLNG Dahej Utilisation (2.9) 4.6
Source: Edelweiss Research, Company
Edelweiss Securities Limited
Q4FY21 preview
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset 3
Q4FY21 industry estimates
Source: Edelweiss Research, Company
Stock Q4FY21E Q4FY20 Y-o-Y Q3FY21 Q-o-Q Comments / Key highlights
(INR mn) (INR mn) (%) (INR mn) (%)
Revenues 14,08,360 13,62,400 3.4 11,78,600 19.5
Reported EBITDA 2,38,626 2,17,820 9.6 2,15,660 10.6
Core EBITDA 2,38,626 2,60,820 (8.5) 2,15,660 10.6
Reported PAT 1,33,340 63,480 110.1 1,32,220 0.8
Core PAT 1,33,340 1,06,480 25.2 1,32,220 0.8
Revenues 8,49,799 6,89,914 23.2 6,67,313 27.3
Reported EBITDA 44,695 -16,996 NA 43,057 3.8
Core EBITDA 28,317 44,134 (35.8) 34,587 (18.1)
Reported PAT 28,944 -13,610 NA 27,776 4.2
Core PAT 12,566 47,520 (73.6) 19,306 (34.9)
Revenues 9,42,456 6,61,549 42.5 6,86,592 37.3
Reported EBITDA 37,557 -17,095 NA 33,015 13.8
Core EBITDA 23,672 33,785 (29.9) 16,815 40.8
Reported PAT 25,918 268 NA 23,546 10.1
Core PAT 12,033 51,148 (76.5) 7,346 63.8
Revenues 13,76,543 11,84,391 16.2 10,63,365 29.5
Reported EBITDA 1,00,779 -1,10,925 NA 96,219 4.7
Core EBITDA 77,682 94,757 (18.0) 66,219 17.3
Reported PAT 55,187 -51,853 NA 49,166 12.2
Core PAT 32,090 1,53,829 (79.1) 19,166 67.4
Indraprastha Gas Revenues 15,782 15,525 1.7 14,462 9.1
EBITDA 5,160 3,767 37.0 5,007 3.1
Core PAT 3,464 2,534 36.7 3,349 3.4
Mahanagar Gas Revenues 7,174 6,866 4.5 6,664 7.7
EBITDA 3,273 2,438 34.2 3,167 3.3
Core PAT 2,253 1,666 35.3 2,172 3.7
Gujarat Gas Revenues 31,851 26,666 19.4 28,294 12.6
EBITDA 6,212 4,267 45.6 6,148 1.0
Core PAT 3,904 2,459 58.8 3,922 (0.4)
We expect sequentially flat EBITDA on high LNG spot
prices offset by some volume gains in Morbi region and
pharma belt. This should translate into EBITDA margin
of INR5.88/scm (flat QoQ, +24% YoY).
Indian Oil
We build in 4.7% QoQ rise in Reported EBITDA on
anticiapted high inventory gains. We expect Reported
GRM to be aorund USD3.5/bbl due to a rise in cracks
across distil lates. Modest core marketing margins with
improved sales volumes amid covid-19 lockdown is
expected to improve marketing EBITDA. Petchem EBITDA
is l ikely to rise on commissioning of PP capacity at
Paradip and higher margins.
We anticiapte 10% YoY volume gorwth. Commercial
volumes is expected to remain low in comparison with
CNG and PNG volumes, which are back to pre covid level
and even more then that levels. EBITDA margins is l ikely
to im prove on higher oeprating leverage.
We expect 5.7% YoY volume growth led by higher CNG
and PNG volumes in Mumbai and Pune regions. PNG
volumes is l ikely to fare better than CNG volume on
higher industrial and domestic demand. EBITDA
margins is l ikely to improve on higher oeprating
leverage.
RIL
We expect modest O2C EBITDA (-3.8% YoY, +23.8% QoQ),
strong retail EBITDA of +35% YoY and modest telecom
EBITDA of +37.7% YoY(on low base), leading to a +9.6%
YoY (+10.6% QoQ) increase in consolidated EBITDA.
GRM is l ikely to increase led by strong cracks across
distil lates. Petchem margin has surged YoY due to
higher polyster and polymer spreads and with moderate
demand leads to increase in petchem EBITDA. Jio EBITDA
is l ikely to increase driven by subscriber additions to
419mn while retail EBITDA increase will l ikely be driven
by higher footfall.
BPCL
BPCL's EBITDA is expected to improve by over 3.8% QoQ
(lower base in Q4FY20 due to inventory write off) on the
back improving GRMs (forecast USD 4/bbl in Q4FY21E).
Reported GRM implies a USD2.2/bbl premium to
benchmark as BPCL's HSFO output is significantly lower.
Core marketing margins is expected to remain modest
YoY, with modest marketing sales
HPCL
HPCL EBITDA is l ikely to increase 14% QoQ (lower base
in Q4FY20 due to inventpry write off) due to high
invenotry gains and better refining margins than Q3.
We expect reported GRM at USD 2.5/bbl. Modest core
marketing margins with improved marketing sales
volume is l ikely to improve marketing EBITDA. We
expect high inventory gains in Q4.
Oil & Gas
Edelweiss Securities Limited
4 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Q4FY21 industry estimates (Contd.)
Source: Edelweiss Research, Company
Production likely to remain muted
We estimate ONGC’s oil/gas production would decline 1.7%/2.8% YoY to
5.7MMT/5.9bcm in Q4FY21 (versus 5.8MMT/6bcm YoY).
ONGC’s gas production to continue to contract in Q4FY21E
Source: Edelweiss Research, Company
Stock Q4FY21E Q4FY20 Y-o-Y Q3FY21 Q-o-Q Comments / Key highlights
(INR mn) (INR mn) (%) (INR mn) (%)
GAIL Revenues 1,66,652 1,77,531 (6.1) 1,54,543 7.8
EBITDA 24,961 24,754 0.8 19,195 30.0
Core PAT 18,768 30,182 (37.8) 14,873 26.2
GSPL Revenues 4,925 5,950 (17.2) 5,800 (15.1)
EBITDA 3,114 3,557 (12.5) 3,984 (21.8)
Core PAT 1,862 2,256 (17.5) 2,475 (24.8)
Petronet LNG Revenues 94,797 85,672 10.7 73,282 29.4
EBITDA 12,486 6,975 79.0 13,353 (6.5)
Core PAT 8,087 3,590 125.2 8,785 (7.9)
ONGC Revenues 2,26,785 2,14,562 5.7 1,70,238 33.2
Reported
EBITDAX1,05,903 36,889 NA 83,461 26.9
Reported
EBITDAX1,05,903 85,879 23.3 83,461 26.9
Reported PAT 28,173 -30,980 NA 13,782 NA
Reported PAT 28,173 18,010 56.4 13,782 NA
We expect GAIL's EBITDA to remain robust QoQ (low
base in Q4FY20 due to deferred tax adjustment) led by
strong petchem margins and better LPG/liquid
hydrocarbons business. Transmission EBITDA is l ikely
to improve 8.4% YoY due to more demand led by work
from home culture. Trading margins is expected to
remain strong with high spot LNG prices. LPG EBITDA is
also expected to increase sequentially QoQ due to
increased LPG cylinder demand and better pricing of oil-
l inked LPG.
GSPL is l ikely to see a muted volume demand at
34.5mmsmd, which is a decrease of 6.2% YoY due to an
uptick in spot LNG prices. We expect EBITDA to decrease
by 12.5% YoY, with opex/scm rising QoQ due to costs
incurred for network expansion.
PLNG EBITDA is expected to surge 79% YoY (low base in
Q4FY20 due to very high opex) ledy by improved
volumes along with steady tariff. As the lockdown is
getting phase wise lifted, we expect volume growth to
increase by 4% YoY with higher util isation at Kochi and
capacity expansion at Dahej.
Higher crude prices (20% YoY), gas production (-1.7%
YoY) and gas prices (-25% YoY) is l ikely to increase
revenue by 5.7% YoY. Oil production, however, should
increase in FY22 after several quarters of decline. We
expect EBITDAX to increase ~2x YoY (low base in Q4FY20
due to invenotry write off ) led by higher higher oil
realizations.
-15.0
-9.0
-3.0
3.0
9.0
15.0
5.0
5.4
5.8
6.2
6.6
7.0
Q3
FY1
6Q
4FY
16
Q1
FY1
7Q
2FY
17
Q3
FY1
7Q
4FY
17
Q1
FY1
8Q
2FY
18
Q3
FY1
8Q
4FY
18
Q1
FY1
9Q
2FY
19
Q3
FY1
9Q
4FY
19
Q1
FY2
0Q
2FY
20
Q3
FY2
0Q
4FY
20
Q1
FY2
1Q
2FY
21
Q3
FY2
1Q
4FY
21
E
YoY
chan
ge %
Pro
du
ctio
n (
MM
T/ B
CM
)
Oil Production Gas Production #REF!
Gas Y-o-Y change Oil Y-o-Y change
Edelweiss Securities Limited
Q4FY21 preview
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset 5
Singapore benchmark GRMs have recovered to USD1.8/bbl
Source: Company, Edelweiss Research
GRM comparison of Indian players – Mild YoY recovery likely
Source: Edelweiss Research, Company
0.5
3.3
4.7
-0.2
0.01
-0.4
3.84.3
3
1.21.1
6.1
5.2
3.8
1.8
-0.5
0.9
2.3
3.7
5.1
6.5
Naphtha Gasoline Diesel Jet/Kero Pet Coke Fuel Oil SingaporeGRM
(USD
/ b
bl)
Q2FY21 Q3FY21 Q4FY21
-10.0
-5.0
0.0
5.0
10.0
15.0
Q2
FY1
4
Q4
FY1
4
Q2
FY1
5
Q4
FY1
5
Q2
FY1
6
Q4
FY1
6
Q2
FY1
7
Q4
FY1
7
Q2
FY1
8
Q4
FY1
8
Q2
FY1
9
Q4
FY1
9
Q2
FY2
0
Q4
FY2
0
Q2
FY2
1
Q4
FY2
1E
GR
M (
USD
/ b
bl)
BPCL IOCL HPCL RIL
Oil & Gas
Edelweiss Securities Limited
6 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Quarterly industry operational snapshot
Source: Edelweiss Research, Company
Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21E YoY (%)Refining Througput (MMT)IOCL 17.4 17.3 17.5 17.5 17.1 12.9 14.0 17.9 18.0 5.0BPCL 8.2 7.5 7.7 8.4 8.4 5.1 5.6 7.2 7.6 (10.0)HPCL 4.6 3.9 4.6 4.2 4.5 4.0 4.1 4.0 4.2 (7.0)Throughput Growth (YoY %)IOCL 1.2 (2.2) (1.6) (7.8) (1.4) (25.2) (20.3) 2.1 5.0BPCL 4.6 (3.7) 1.2 12.3 2.2 (31.0) (26.5) (13.9) (10.0)HPCL (0.6) (13.3) (4.2) (8.8) (1.3) 1.3 (11.0) (3.8) (7.0)GRM ($/bbl)IOCL 4.1 4.7 1.3 4.1 (9.6) (2.0) 8.6 2.2 3.5 NABPCL 2.7 2.8 3.4 3.2 0.8 0.4 5.8 2.5 4.0 433.3HPCL 4.5 0.8 2.8 1.8 (1.2) 0.0 5.1 1.9 2.5 NAInventory Gains ($/bbl)IOCL 2.7 1.1 (1.7) 2.1 (17.8) (6.4) 9.6 1.0 1.0 NABPCL 0.2 (0.9) (0.4) 1.0 (6.7) (1.5) 4.2 1.2 2.2 NAHPCL 2.4 (2.6) 0.3 0.3 (10.6) 0.9 2.4 2.8 1.5 NACore GRM ($/bbl)IOCL 1.4 3.6 3.0 2.0 8.2 4.4 (1.0) 1.2 2.5 (69.5)BPCL 2.6 3.7 3.8 2.2 7.4 1.9 1.6 1.2 1.8 (75.7)HPCL 2.1 3.3 2.6 1.5 9.4 (0.9) 2.7 (1.0) 1.0 (89.3)Marketing sales volume (MMT)IOCL 21.5 21.6 20.2 21.9 20.7 15.5 17.2 21.2 20.8 0.9BPCL 11.7 11.3 10.5 12.3 11.2 8.3 9.2 11.4 11.4 1.8HPCL 10.1 10.1 9.4 10.6 9.6 7.6 8.4 10.4 10.2 6.4Volume Growth (%)
IOCL 0.3 (0.4) (1.1) 1.6 (3.9) (28.3) (14.7) (3.2) 0.9BPCL 5.2 0.5 (1.0) 7.7 (3.5) (26.6) (12.0) (8.0) 1.8HPCL 7.0 3.8 2.8 8.6 (5.3) (24.5) (10.3) (1.7) 6.4Inventory Gains (INR/ltr)IOCL 0.1 0.1 0.2 (0.0) (1.0) 0.8 0.0 0.7 0.4 NABPCL 0.2 (0.1) 0.1 0.1 (1.5) 0.8 0.9 0.2 0.4 NA
HPCL 0.3 (0.0) (0.0) 0.2 (1.4) 0.5 1.3 0.6 0.6 NA
Edelweiss Securities Limited
Q4FY21 preview
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset 7
Marketing: Strong petrol margins in Q4FY21
Q4FY21 marked a sustained quarter for marketing margins across OMCs, with
margins continuing to track towards long-term trends. This was driven by: i) OMCs’
much higher margins in tier-2 cities/rural than metros; and ii) ATF/lubricants/other
industrial margins, which are typically higher than auto fuel margins.
Higher petrol marketing margins than diesel margins in Q3
Source: Company, Edelweiss Research
Petrol demand (Jan-Feb-21) has increased 2% YoY
Source: Company, Edelweiss Research
-2.5
2.5
7.5
12.5
17.5
22.5
Mar
-18
Ap
r-1
8
Jun
-18
Jul-
18
Sep
-18
No
v-1
8
Dec
-18
Feb
-19
Ap
r-1
9
May
-19
Jul-
19
Sep
-19
Oct
-19
Dec
-19
Jan
-20
Mar
-20
May
-20
Jun
-20
Au
g-2
0
Oct
-20
No
v-2
0
Jan
-21
Mar
-21
(IN
R/l
tr)
Diesel Petrol
Gujarat elections
Karnataka elections Central
elections
Russia- Saudi oil price war on production
cuts
Surge in margins again after retailpetrol/ diesel prices started to
increases
-60.0
-40.0
-20.0
0.0
20.0
40.0
0.0
0.6
1.2
1.8
2.4
3.0
Au
g-1
8
Oct
-18
Dec
-18
Feb
-19
Ap
r-1
9
Jun
-19
Au
g-1
9
Oct
-19
Dec
-19
Feb
-20
Ap
r-2
0
Jun
-20
Au
g-2
0
Oct
-20
Dec
-20
Feb
-21
(%)
(MM
TPA
)
MS Demand Growth
Oil & Gas
Edelweiss Securities Limited
8 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Diesel demand continues to lag in Q4FY21 (-5% YoY in Jan-Feb-21)
Source: Company, Edelweiss Research
Demand for petroleum remain subdued in Jan-Feb-21 (-4% YoY)
Source: Edelweiss Research, Company
-50.0
-35.0
-20.0
-5.0
10.0
25.0
0.0
1.8
3.6
5.4
7.2
9.0
Au
g-1
8
Oct
-18
Dec
-18
Feb
-19
Ap
r-1
9
Jun
-19
Au
g-1
9
Oct
-19
Dec
-19
Feb
-20
Ap
r-2
0
Jun
-20
Au
g-2
0
Oct
-20
Dec
-20
Feb
-21
(%)
(MM
TPA
)
HSD Demand growth
-45.0
-33.0
-21.0
-9.0
3.0
15.0
0.0
4.0
8.0
12.0
16.0
20.0
Au
g-1
8
Oct
-18
Dec
-18
Feb
-19
Ap
r-1
9
Jun
-19
Au
g-1
9
Oct
-19
Dec
-19
Feb
-20
Ap
r-2
0
Jun
-20
Au
g-2
0
Oct
-20
Dec
-20
Feb
-21
(%)
(MM
TPA
)
PP Demand Demand growth
Edelweiss Securities Limited
Q4FY21 preview
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset 9
City gas comparison—Volume growth at GGL surged, remained consistent at IGL and slowed at MGL
Source: Company, Edelweiss Research
Sharp V-shaped volume recovery in Q4FY21 across CGDs
Source: Edelweiss Research
-60.0
-36.0
-12.0
12.0
36.0
60.0
Q1
FY1
9
Q2
FY1
9
Q3
FY1
9
Q4
FY1
9
Q1
FY2
0
Q2
FY2
0
Q3
FY2
0
Q4
FY2
0
Q1
FY2
1
Q2
FY2
1
Q3
FY2
1
Q4
FY2
1E
Yo
Y (
%)
IGL MGL GGL IGL average MGL average GGL average
Oil & Gas
Edelweiss Securities Limited
10 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Comparison of EBITDA margins across CGDs (MGL stands higher)
Source: Edelweiss Research
Snapshot of Oil & Gas industry
Source: Edelweiss Research, Company
2.0
4.4
6.8
9.2
11.6
14.0
Q1
FY1
9
Q2
FY1
9
Q3
FY1
9
Q4
FY1
9
Q1
FY2
0
Q2
FY2
0
Q3
FY2
0
Q4
FY2
0
Q1
FY2
1
Q2
FY2
1
Q3
FY2
1
Q4
FY2
1E
(IN
R/s
cm)
IGL MGL GGL IGL average MGL average GGL average
All price charts cannot be included given the large of number of companies in our coverage. Specific charts may be available upon request
Edelweiss Securities Limited
Q4FY21 preview
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset 11
DISCLAIMER Edelweiss Securities Limited (“ESL” or “Research Entity”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, Investment Adviser, Research Analyst and related activities.
This Report has been prepared by Edelweiss Securities Limited in the capacity of a Research Analyst having SEBI Registration No.INH200000121 and distributed as per SEBI (Research Analysts) Regulations 2014. This report does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 includes Financial Instruments and Currency Derivatives. The information contained herein is from publicly available data or other sources believed to be reliable. This report is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this report should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in Securities referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors.
This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ESL and associates / group companies to any registration or licensing requirements within such jurisdiction. The distribution of this report in certain jurisdictions may be restricted by law, and persons in whose possession this report comes, should observe, any such restrictions. The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. ESL reserves the right to make modifications and alterations to this statement as may be required from time to time. ESL or any of its associates / group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ESL is committed to providing independent and transparent recommendation to its clients. Neither ESL nor any of its associates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including loss of revenue or lost profits that may arise from or in connection with the use of the information. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Past performance is not necessarily a guide to future performance .The disclosures of interest statements incorporated in this report are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. The information provided in these reports remains, unless otherwise stated, the copyright of ESL. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and copyright of ESL and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright holders.
ESL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in the system, break down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the ESL to present the data. In no event shall ESL be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by the ESL through this report.
We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive this report at the same time. We will not treat recipients as customers by virtue of their receiving this report.
ESL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the
Securities, mentioned herein or (b) be engaged in any other transaction involving such Securities and earn brokerage or other compensation or act as a market maker in the financial
instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such company(ies) or have other potential/material conf lict of interest with
respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance. ESL may have proprietary long/short
position in the above mentioned scrip(s) and therefore should be considered as interested. The views provided herein are general in nature and do not consider risk appetite or investment
objective of any particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business
with ESL.
ESL or its associates may have received compensation from the subject company in the past 12 months. ESL or its associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. ESL or its associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research analyst or his/her relative or ESL’s associates may have financial interest in the subject company. ESL and/or its Group Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise in the Securities/Currencies and other investment products mentioned in this report. ESL, its associates, research analyst and his/her relative may have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance.
Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume currency risk.
Research analyst has served as an officer, director or employee of subject Company: No
ESL has financial interest in the subject companies: No
ESL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report.
Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
ESL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
Subject company may have been client during twelve months preceding the date of distribution of the research report.
There were no instances of non-compliance by ESL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years except that ESL had submitted an offer of settlement with Securities and Exchange commission, USA (SEC) and the same has been accepted by SEC without admitting or denying the findings in relation to their charges of non registration as a broker dealer.
A graph of daily closing prices of the securities is also available at www.nseindia.com
Analyst Certification:
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
Oil & Gas
Edelweiss Securities Limited
12 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset
Additional Disclaimers
Disclaimer for U.S. Persons
This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Edelweiss Financial Services Inc. ("EFSI"). Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc.
Disclaimer for U.K. Persons
The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report or any of its contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person. Disclaimer for Canadian Persons
This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst.
This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31-103 ("NI 31-103")) who are resident in the Province of Ontario, Canada (an "Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person.
ESL is relying on an exemption from the adviser and/or dealer registration requirements under NI 31-103 available to certain international advisers and/or dealers. Please be advised that (i) ESL is not registered in the Province of Ontario to trade in securities nor is it registered in the Province of Ontario to provide advice with respect to securities; (ii) ESL's head office or principal place of business is located in India; (iii) all or substantially all of ESL's assets may be situated outside of Canada; (iv) there may be difficulty enforcing legal rights against ESL because of the above; and (v) the name and address of the ESL's agent for service of process in the Province of Ontario is: Bamac Services Inc., 181 Bay Street, Suite 2100, Toronto, Ontario M5J 2T3 Canada.
Disclaimer for Singapore Persons
In Singapore, this report is being distributed by Edelweiss Investment Advisors Private Limited ("EIAPL") (Co. Reg. No. 201016306H) which is a holder of a capital markets services license and an exempt financial adviser in Singapore and (ii) solely to persons who qualify as "institutional investors" or "accredited investors" as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore ("the SFA"). Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations ("FAR"), sections 25, 27 and 36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to EIAPL when providing any financial advisory services to an accredited investor (as defined in regulation 36 of the FAR. Persons in Singapore should contact EIAPL in respect of any matter arising from, or in connection with this publication/communication. This report is not suitable for private investors.
Disclaimer for Hong Kong persons
This report is distributed in Hong Kong by Edelweiss Securities (Hong Kong) Private Limited (ESHK), a licensed corporation (BOM -874) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to Section 116(1) of the Securities and Futures Ordinance “SFO”. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The report also does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of any individual recipients. The Indian Analyst(s) who compile this report is/are not located in Hong Kong and is/are not licensed to carry on regulated activities in Hong Kong and does not / do not hold themselves out as being able to do so. Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reserved.
Aditya Narain
Head of Research