Power: This autumn preview-Steep q-o-q decline probably for OMCs


We notice Dahej’s quantity has improved over the quarter with March utilisation fee > 100% which augurs effectively for Q1FY22e.

We anticipate RIL to report 11% q/q Ebitda progress pushed by O2C and retail. Subscriber provides in Jio, renewed lockdown in retail and petrochemical margins are key. OMC working efficiency ought to decline q/q on decrease advertising margins. Insufficient worth hikes attributable to elections may weigh on BPCL’s privatisation. P-LNG’s Ebitda ought to decline q/q on hostile Spot worth however volumes have recovered whereas GAIL’s Ebitda ought to develop 34% q-o-q pushed by fuel buying and selling income.

RIL’s working efficiency ought to enhance sharply q-o-q: We anticipate 11% q-o-q enchancment in consol Ebitda. O2C was buoyed by enhancing petrochemical and refining profitability whereas Retail benefited from demand normalisation. Jio’s Ebitda ought to be flat q-o-q on a sequential drop in revenues (IUC hit) however expanded Ebitda margin. Renewed restrictions may weigh on retail outlook within the close to time period.

Refining continued modest q-o-q restoration: Asian benchmark GRM averaged $1.8/bbl in Q4FY21 (vs $1.2 in Q3) towards decade common of $6.2/bbl with continued weak spot in diesel, jet and LPG. Renewed Covid associated restrictions in Western Europe and components of Asia are prone to weigh on margins within the close to time period.

Advertising margins fell sharply q-o-q: Margins fell c27% q-o-q as OMCs didn’t cross on the complete extent of the crude rally probably owing to the state elections. Margins on petrol are in damaging territory and on diesel languish considerably under normative ranges. As in previous situations, we anticipate OMCs to recoup the misplaced margins put up elections if crude stays at present ranges. OMCs lowered retail worth of auto fuels by `0.6/lt in final week of March. Such reductions are damaging for BPCL’s privatisation in our view.

Weak OMC working efficiency in This autumn: With core refining remaining weak and advertising profitability falling sharply q-o-q, working efficiency will present steep q-o-q decline. Reported numbers can be buoyed by stock positive aspects in refining. Advertising volumes and refinery thruput could possibly be negatively impacted in Q1FY22e on renewed restrictions.

Petronet-LNG would see excessive Spot worth affect: We undertaking 5% q-o-q decline in Dahej quantity and discount in buying and selling margin attributable to very excessive Spot worth in Jan. We undertaking 7% sequential decline in Ebitda in This autumn. We notice Dahej’s quantity has improved over the quarter with March utilisation fee > 100% which augurs effectively for Q1FY22e.

GAIL ought to report q-o-q PAT progress: We anticipate 34% enchancment in GAIL’s sequential Ebitda as fuel buying and selling swings from loss to robust revenue on beneficial Spot LNG worth. LPG’s profitability ought to enhance sequentially.

RIL high choose: We reiterate our optimistic stance on RIL as we see progress with an inexpensive smartphone and a stake sale in O2C enterprise in FY22e. Despite the fact that HPCL and IOCL stay close to cyclical low valuation multiples, re-rating may wait till both crude falls or demand recovers with vaccine penetration. We desire P-LNG on engaging valuation.

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