The entire gas space is in focus. Macquarie has identified few winners and losers on the back of zooming gas prices.
According to the firm, the recent spike in global liquefied natural gas (LNG) prices is likely to sustain at least for the next six months. So, for the Indian companies, for the margins to sustain, the end customer prices need to increase by 40 percent for Gujarat Gas, 60 percent for Mahanagar Gas Ltd (MGL) and 90 percent price hike needs to be done for Indraprastha Gas Ltd (IGL) to maintain these kinds of margins.
These gas companies are sitting on peak margins and peak valuations, so on back of that, Macquarie has downgraded IGL with a target price of Rs 520, and Gujarat Gas with a target price of Rs 450.
According to the brokerage house, GAIL and Oil and Natural Gas Corporation (ONGC) are the big beneficiaries of rising gas prices. So the firm has an ‘outperform’ rating on both the stocks – GAIL with a target price of Rs 205, and ONGC with a target price of Rs 160.
Watch the accompanying video of CNBC-TV18’s Nimesh Shah for more details.
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