MOSL: OIL & GAS-CGDs – regulatory risk ahead; Highlighting a leaf from the past
OIL & GAS: CGDs – regulatory risk ahead; Highlighting a leaf from the past; Downgrade IGL to Neutral
- The Petroleum and Natural Gas Regulatory Board (PNGRB) has introduced a concept paper in order to facilitate competition in the Geographical Areas (GAs) where marketing exclusivity has already expired.
- We believe that this would eventually challenge the monopolistic nature of the business, thereby challenging sales volumes, EBITDA/scm and return ratios for all three City Gas Distribution Companies (CGDs - IGL, MAHGL and GUJGA).
- We had earlier cited the possibility of such a scenario in our Considering the regulatory risk and the risk to long-term volume growth due to the onslaught of EVs, we have trimmed the P/E multiple of IGL from 22x to 20x FY21 (still higher than global peers at ~17x). We downgrade it to Neutral with a target price of INR327 (earlier INR360).
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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