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MOSL: Morning India (31/May/18): 1. NBFC (Ground Reality): Good times for CV financiers; 2. Automobiles; 3. Ecoscope; 4. ONGC; 5. Power Grid Corp; 6. United Breweries; 7. Bharat Electronics

MOrning India (31/May/18): 1. NBFC (Ground Reality): Good times for CV financiers; 2. Automobiles; 3. Ecoscope; 4. ONGC; 5. Power Grid Corp; 6. United Breweries; 7. Bharat Electronics; 8. Alkem Laboratories; 9. Torrent Pharma; 10. Glenmark Pharma

 

Today’s top research idea

ONGC: EBITDA below estimate; Gas production up 2.2% YoY (-3.2% QoQ)

• ONGC’s EBITDA of INR114b was below our estimate of INR131b, led by marginally lower realization and higher opex. PAT of INR59b was slightly ahead of our estimate of INR57b, led by higher other income of INR37b, despite higher interest cost of INR5.9b. Net realization grew 21% YoY to USD66.7/bbl. Subsidy sharing was nil.
• Oil sales declined 3.8% YoY to 5.90mmt, and gas sales grew 3.5% YoY to 4.79bcm. Oil production declined 3.0% YoY to 6.20mmt, while gas production grew 2.2% YoY to 6.08bcm. We raise our oil assumption from USD60/bbl to USD70/bbl. However, we cut the PE multiple from 10x to 8x as threat of subsidy sharing lingers at high oil price. Reiterate Buy with target of INR218.

Piping hot news

Moody's cuts India's growth forecast to 7.3% from 7.5% on higher oil prices

• Moody's Investors Service on Wednesday cut India's 2018 growth forecast to 7.3 per cent from the previous estimate of 7.5 per cent, saying the economy is in cyclical recovery but higher oil prices and tighter financial conditions will weigh on the pace of acceleration. Moody's, however, maintained its 2019 growth forecast at 7.5 per cent.