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Gujarat Gas: Analysis of the key factors...

Apr 4, 2007

Every company or industry has some peculiar characteristics on which growth and profitability hinge. In this write-up, we will focus on the key factors affecting the operating profitability and ultimately, the stock returns of Gujarat Gas.

Exploration of oil and gas: Opportunity and key challenges...

Mar 23, 2007

Oil and natural gas, also known as hydrocarbons, are two of the most important fossil fuels used to meet the energy requirement of the country and support economic growth. Oil and gas account for 45% of the energy requirement of the country. We currently meet more than 70% of our requirement from imports.

Refining: Can India be global hub?

Mar 7, 2007

The public sector oil refining and marketing major, BPCL has recently decided to establish a trading desk at Singapore to manage its exports of refined products. This once again signifies the intent of Indian refiners to target exports and make India one of the major efining hubs in the world. Now, is the dream of becoming a global refining hub realistic?

Fuel prices: India vis-a-vis the others

Feb 14, 2007

In the previous article, Petrol: What are we paying for?, we had a look at the different components that make up the domestic petrol prices. It was revealed that basic costs form only 48% of the selling price of the petrol and the remaining 52% was accounted for by taxes.

Petrol: What are we paying for?

Feb 12, 2007

Petroleum products have strongly pervaded our daily lives, more so diesel and petrol. We know that the oil marketing companies are losing money on the sales of these products due to high crude oil prices internationally. But have we ever thought about the break-up of the price we pay for these fuels. In this write-up, we have made an attempt to identify the different components of the price of petrol and throw some light on each of them.

Refining: A case for higher spreads!

Jan 10, 2007

While rising petroleum product prices have indeed been a cause of worry in recent times, the fact that this is not entirely crude price driven, makes us believe that they are likely to remain stronger on account of certain structural changes in the refining industry. Put otherwise, we believe that the spread between crude oil and product prices is likely to remain stronger than what it was historically. Here are a few reasons as to why we believe this would happen:

Refining industry: A complete overview- I

Dec 20, 2006

Crude oil is a mixture of scores of chemicals and compounds, primarily hydrocarbons. Crude oil must be broken down into its various components by distillation before these chemicals and compounds can be used as fuels or converted to more valuable products. For converting the basic hydrocarbon, crude, into refined consumer products we require refineries. The refined products are then ultimately sold to end-users. Thus on the basis of this, we classify the oil industry into two segments, first ups

Marketing of petroleum products: An overview

Oct 9, 2006

Marketing of petroleum products is set to witness a paradigm shift. Post deregulation of the sector, private players are entitled to open new outlets provided they fulfill certain investment condition. Ever increasing need and expectations of the customer is changing the operational economics of the retail outlet. Consumers are demanding more convenience in the form of comfort, product options and fleet-monitoring services. While retail outlets are heeding to them and revamping their operations

Private players in fuel marketing: A serious threat?

Oct 6, 2006

The marketing of petroleum products was solely with the public sector oil marketing companies (OMCs) prior to dismantling of the APM and deregulation of the downstream oil-marketing segment. IOC, BPCL, HPCL and IBP were the sole downstream players (OMCs) in the oil value chain. However, the sector was deregulated and opened up for the private players at the start of FY03. Reliance (RIL), Essar and Shell were amongst the key players to be granted marketing rights. With the entry of private player

Petroleum products: Overview and growth profile

Sep 11, 2006

Crude and its derivatives are the propelling engines of any economy and sales of petroleum products are contingent upon the growth in economy. In the past, we have seen a fair degree of correlation between the growth in petroleum products and the growth in the overall economic activities. In this article, we provide an overview of major petroleum products in India and their growth trend. These products account for nearly 70% of the total petroleum products sold in the country in volume terms.

Refining: Understanding GRMs...

Sep 7, 2006

After touching historic lows in the late 1990s, the oil-refining sector has seen a significant increase in gross refining margins (GRMs) owing to two factors.

Refineries: Some key factors…

Aug 10, 2006

In the previous articles, we highlighted the business model and financial performance of HPCL and BPCL. Taking the same theme forward, we now move on to analyzing the historical valuation of the two companies. However, before we do that a short tutorial on key factors that affect the performance of a refining company is in order.

Indian Oil Corporation (IOC): Business Model Analysis

Jul 3, 2006

After covering a host of standalone refineries, we now shift our focus towards the refining and marketing (R&M) aspect of the energy value-chain. We start with this segment by analyzing the biggest player on the block, IOC.

Energy: A Porter's perspective

Apr 12, 2006

Refining industry worldwide is performing well over the the past few years, which could be attributed to production disruptions due to natural calamities, lower spare capacity worldwide in addition to the growing demand for petroleum products worldwide. All these factors have resulted in refining companies earning significantly high (gross refining margins) and thereby, reporting higher profits. In this article, we take a look at the Indian refining sector through Michael Porter's model of compe

Energy: An eventful 2004!

Jan 4, 2005

The year 2004 provided investors with enough reasons to cheer with the benchmark Sensex gaining over 14% during the year, despite the infamous 'Black Monday' in May following a change in the government at the Centre. The sector that was affected the most during the year was the energy sector with elections and other political repercussions playing a major role in product pricing and therefore, the company performance. However, the major moves during the later half by the government on the polici

IBP – IOC: Who got a better deal?

Dec 22, 2004

The press release from Indian Oil Corporation (IOC) reads as “Indian Oil Corporation Ltd has informed BSE that the Board of Directors of Company in their meeting held on December 22, 2004 have approved the Scheme of Amalgamation for merger of IBP Company Ltd (IBP) with the Company. The Board of Directors have also recommended a swap ratio of 125:100 i.e. 125 equity shares of Rs 10/- each of the Company ('the Transferee Company') as fully paid up for every 100 equity shares of Rs 10/- each of IBP

Oil Inc. 1HFY05: A mixed bag

Dec 13, 2004

For domestic oil marketing companies, the first half of FY05 was a mixed bag with topline witnessing strong growth while the companies suffering on account of policies on the bottomline front. As a matter of fact, while the topline witnessed robust growth of over 19% YoY, the bottomline grew by a meager 3% YoY during the period.

IOC: Paying for the policies…

Nov 30, 2004

Indian Oil Corporation, the country’s largest downstream petroleum sector company, posted a decent growth in the top-line in 2QFY05 with nearly 20% while the bottomline dipped by over 31% as a result of a freeze on pricing by the government in the face of rising input costs. Being a major player in the LPG segment, IOC took the largest hit on the subsidies front as LPG prices zoomed to over US$ 467 per tonne, as retail prices remained relatively unchanged.

IBP: A lone ranger…

Nov 29, 2004

IBP, a standalone marketing subsidiary of the energy sector’s largest downstream player IOC, posted poor 2QFY05 results. Although the topline improved by an impressive 31% YoY, the bottomline actually slipped in the negative with a margin of –2%. The company continues to take a hit from both sides i.e. prices of petro-products have increased at the sourcing level while prices have not increased proportionately at the sales side.

LPG pricing: An impact analysis…

Nov 18, 2004

The recent government decisions regarding the hike in petroleum product prices have resulted in a strong belief that the energy sector is on the right path. Let us analyse the impact of the recent price hike in case of LPG of Rs 20 per cylinder and also the decision to increase the per cylinder prices by Rs 5 per month. We have assumed that the price hike of Rs 5 per cylinder stays for only a month on a conservative basis.

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