OMCs and ONGC lead the surge
The market, as expected, as zoomed up today morning, reacting positively to the diesel deregulation and much awaited gas price hike. The gainers are led by Oil Marketing Companies (OMCs) – HPCL up 7% at Rs.524 which is after hitting a new high at Rs.534, BPCL up 6% at Rs.706, IOC up 6% at Rs.387 and ONGC up 5.5% at Rs.419. All the stocks have shown immense spurt in volumes.
The Govt yesterday announced a new formula for all Indian produced gas, effective 1st Nov. The current price of US$ 4.2 per million British thermal unit (mmBtu) will rise to US$ 6.17 per mmBtu on a like-to-like basis. The Finance Minister, while announcing this yesterday stated that price from November 1 and would be valid till March 2015, will be US$ 5.61 per mmBtu on heat value the fuel will generate on gross calorific value (GCV) basis. If compared on NCV terms, the price will rise from USD 4.2 to USD 6.17 per mmBtu.
For ONGC, every US$1 rise in gas price will boost its revenues by Rs.4000 crore and net profit by Rs.2350 crore. Given the US$ 2 price hike, from November onwards, till end of March, OGNC’s net profit will gain around Rs.1950 crore.
The price would then be revised for the next six months ending September 2015 on the basis of prices prevalent between January 2014 and December, 2014. The prices would be announced 15 days in advance of the half year.