Oil & Gas: High gas/LNG prices to help ONGC, OIL & GAIL
At latest futures, FY22-FY23e Brent is 5-4%, FY23e deepwater and APM gas prices are 40-60% and FY22e LPG price is 22% above our estimates. Net impact of this, upside to NRL’s FY22e GRM and downside to ONGC’s FY22-FY23e gas sales, is upside to FY22-FY23e EPS of ONGC of 8-27%, OIL of 14-17% and GAIL of 27-6%.
APM gas price surge may pose challenge to Gujarat Gas (GGL), MGL and IGL as CNG price may need to be hiked by 49-53% in Oct’21-Oct’22 to pass on gas cost rise and maintain margins. Spot LNG surge may push GGL in the red in FY22e if there is no further price hike; downside to FY22e EPS would be 21% if further price hike lifts margin to Rs 4.5/scm (Rs 5.5/scm in base case).
