• Refining (downstream) dented by inventory losses suppressing refining margins; OMCs also lose market share in domestic HSD/MS sales: Brent oil price declined by around 7% sequentially to $51/bbl in Q1FY2018, resulting in inventory loss of $2-3.4/bbl to oil marketing companies (OMCs). As a result, Indian Oil (IOCL)/Bharat Petroleum (BPCL)/Hindustan Petroleum (HPCL) reported weak Q1FY2018 gross refining margin (GRM) of $4.3/$4.9/$5.9 per barrel, which was down by 52%/19%/27% sequentially, though the benchmark Singapore GRM was largely flat QoQ at $6.4/bbl in Q1FY2018. On the other hand, Reliance Industries Limited (RIL) reported strong GRM of $11.9/bbl (up 3.5% YoY and QoQ) and its premium over the Singapore Complex GRM widened to $5.5/bbl in Q1FY2018 from $5.1/bbl in Q4FY2017. Public sector OMCs also witnessed loss in market share in the high-margin motor spirits (MS) and high-speed diesel (HSD) segments to private sector competitors.
• Exploration (upstream) companies hurt by lower realisations: Oil and Natural Gas Corp. (ONGC)/Oil India reported a decline of 7.1%/7.8% QoQ (+10.7%/+12.3% YoY) in their net oil realisation to $51/$48.4 per barrel due to the drop in oil prices during the quarter. Along with lower realisation, the steep dip in other income led to a sharp decline in adjusted profit of ONGC and Oil India during the quarter.
• Mid-stream companies in gas value chain performed well in Q1: Petronet LNG and GSPL reported healthy volume growth during the quarter, resulting in double-digit earnings growth. On the other hand, Gas Authority of India (GAIL) reported sequential volume decline across segments, except for LPG and liquid hydrocarbons (volume increased by 6.2% QoQ) in Q1. Consequently, PAT grew by only 8.2% during the quarter, partially affected by lower other income.
Liquor: Half the liquor outlets remain shut post the highway liquor ban, liquor industry feels the pinch – negative for liquor companies (especially large companies such as United Spirits, United breweries and Radico Khaitan, which has pan India presence) More than half of 30,000 liquor vendors have shut downed their shops on April 1 after the Supreme Court banned sale and serving of alcohol within 500 metre of state and national highways. Industry had initially expected most liquor shops and bars to either relocate or reopen in few months. But now expects the situation to normalise by next year. On the positive note, the top court last allowed authorities to de-notify state and national highways passing through municipal limits to let liquor vends along highways in cities and towns resume business.
HPCL: Government of Rajasthan and HPCL signed agreement to set-up refinery at Barmer; positive read through for HPCL
Rajasthan Government has signed an agreement with Hindustan Petroleum Corporation Limited (HPCL) to set up a joint venture company HPCL Rajasthan Refinery Limited to establish Rs 43,129 crore refinery-cum-Petrochemical Complex at Barmer as per media reports. HPCL will have 74% stake and the state government 26% partnership in the new company. Positive read through for HPCL.
Indian Oil Corp (IOCL) : has completed maintenance turnaround at its polyethylene (PE) and polypropylene (PP) plants at Panipat. The plants were shutdown in mid-July for maintenance. PE plant has HDPE capacity of 0.3mmt and LDPE swing capacity of 0.2mmt while PP plant has capacity of 0.6mmt. Sentimentally positive for IOCL.
Maruti Suzuki: Launches the Ciaz – S, a sporty version of its sedan Ciaz with prices starting Rs 9.39 Lakh; Positive, Maruti Suzuki has launched a new variant of Ciaz named as Ciaz S priced at Rs 9.39 Lakh for petrol and Rs 11.55 Lakh (ex showroom Delhi) for diesel variant. T he Ciaz S has been refreshed with a spoiler pack – front, side and a rear underbody plus trunk-lid spoiler, adding a distinctive look and enhancing the aerodynamics of the car. The new variant would further strengthen the position of Ciaz in the passenger vehicle market and could lead to market share gains for the company
Somany Ceramics: Sudha Somany Ceramics, an Associate of Somany Ceramics is setting up a facility in Andhra Pradesh to produce about 5.00 million square meters of vitrified tiles. The same is expected to be commissioned in the last quarter of financial year 2018-19. Positive read thru for the stock.
Infosys: ATP in association with Infosys launches new PlayerZone bringing an enhanced digital experience for players, ATP and Infosys announced the launch of a new 'PlayerZone' app and website. The revamped PlayerZone, allows users to engage with each other and access information across a wide range of operational aspects related to life on Tour. The new app will increase engagement with the next generation of players and provide a central portal of information as players' progress through different stages of their career.
Bharti Airtel: To hold shareholders, creditors meet in September on Telenor merger deal.
Telecom: IMG meeting on telecom postponed to August 22, The Inter-Ministerial Group (IMG) constituted to suggest measures to ease the financial stress in the telecom sector, which was supposed to meet today, will now meet on August 22, and it is likely to come out with the final report on suggestions for the industry on the same day.“The meeting has been postponed to August 22 as some of the members were not available for the meeting on Friday. The IMG was set up on May 16 to work on the stress in balance sheets in the telecom sector, and has been studying balance sheets of the past three years (2014-15, 2015-16 and 2016-17) of telcos. Meanwhile, on its last its meeting on August 11, the IMG had discussed that a policy intervention may not be required as ‘green shoots’ in the telecom sector have started to appear in the first quarter.