Published on 3/09/2019 2:05:34 PM | Source: Reliance Securities Ltd

View On Major fire broke out at Uran ONGC complex By Yogesh Patil

Posted in Expert Views| #ONGC #Expert Views #Reliance Securities Ltd

Below is the Views On ONGC (ONGC IN) - Major fire broke out at Uran ONGC complex  by Mr. Yogesh Patil, Research Analyst, Reliance Securities


ONGC (ONGC IN) - Major fire broke out at Uran ONGC complex

* A massive fire broke out at the Uran ONGC gas complex, Today morning. Fire brigade personnel have been fighting to control the fire.

* The ONGC complex processes all the gas, which gets produced at Bombay High fields.  ONGC has Gas Sweetening Unit (processing) at Uran of 15 mmscmd which is 21%/27% of the total gas production/sales.

* ONGC has mentioned that “There has been no impact on oil processing, while gas has been diverted to its plant in Hazira in Gujarat”. Hazira based unit can process 45mmscmd of gas, which will also process the gas diverted from Uran plant.  

* A processed Bombay High field gas at Uran, it is been supplied to Mahanagar Gas CNG network. We believe Mahanagar Gas CNG gas sales  (~2.2mmscmd) will be affected. CNG sales contributes ~70% of the total gas sales of Mahanagar Gas. We have Hold recommendation on Mahanagar Gas.

* Our View : Oil processing is not affected while the gas from Bombay high will be processed at Hazira facility, we do not see a major impact of the fire incident at Uran plant on ONGC gas sales in 2QFY19. However, In July’19, ONGC’s gas sale fell by 3.4% YoY led by 1.2% fall in production and higher internal consumption. Fall in oil prices can impact earnings in FY20 while the target for disinvestment receipts has increased to Rs 1.05 trillion for FY20, from Rs 900 bn in the interim Budget. This is key overhang on the stock as Govt. holds 64.25% stakes in ONGC. The stock is trading at 4.9x of FY20 EPS and 3.1x of FY20E EBITDA (consensus) which is discount to long term average. Positive view on stock


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