Mumbai: Goldman Sachs turns negative on Indian oil marketing companies, says any diesel price hike would “only reduce the losses in the near term, without any major positive impact on the profitability.”
Adds “high” interest costs also weigh. Goldman downgrades Indian Oil Corp and Hindustan Petroleum Corp to “sell” from “neutral” and Bharat Petroleum Corp to “neutral” from “buy.”
Investment bank says government-owned upstream companies are better placed then downstream ones because of more “stable” cash flows and “attractive valuations.”
Goldman says retains Oil & Natural Gas Corp with a “buy” rating and upgrades Oil India to “neutral” from “sell”.
Turning to gas sector, Goldman says it expects the gap between supply and demand to widen due to production declines at KG-D6 blocks, leading to further imports of LNG.
Upgrades Gujarat State Petronet to “buy” from “neutral” on “attractive” valuations and “likely positive surprise” on regulated transmission tariffs.
Goldman maintains “buy” rating on Cairn India citing “high oil leverage and best production growth profile among peers.”
Lastly, Goldman maintains “buy” ratings on Reliance Industries and Essar Oil as it expects refining margins to improve during H2 2012.