Reliance Industries, ONGC and OIL India shares plunge on EC intervention in natural gas price hike case

Mar 26 2014, 12:03 IST
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Shares of upstream oil & gas companies RIL, ONGC and OIL India slid between 3% and 4% intraday.. Shares of upstream oil & gas companies RIL, ONGC and OIL India slid between 3% and 4% intraday..
SummaryShares of upstream oil & gas companies Reliance Industries, ONGC and OIL India slid between 3% and 4% intraday on Tuesday after the Election Commission surprised analysts by asking the government on Monday to defer the natural gas price hike that was to be effective from April 1.

react negatively in the near term as the hike is likely to be delayed only by one quarter.

In year to date, the BSE Oil & Gas index has gained 3.76%. Shares of OIL India (-2.93%) and RIL (-1.8%) have declined during the same period, while ONGC has gained more than 10%. Experts remain bullish on ONGC and OIL India on account of attractive valuations.

“We retain our ‘overweight’ ratings, however, as we expect gas prices to rise in 2Q FY15 and maybe oil realisations in FY16E too, as retail under-recoveries fall. Valuations are also inexpensive at 6.5-7.5x FY15E P/E,” Barclays analysts said in the report. “We retain ‘equalweight’ on RIL,” they added.

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