Over the last few months the oil & gas sector has been valued unfavourably due the disinvestment and deregulation in the sector. These companies may over the short term offer some potential upside. However, over the long run, which segment of the sector offers the highest potential demand growth.
In the last eight years coal, diesel, naphtha and gas have grown at a compounded rate of 3.5%, 6.2%, 7.6% and 6.5% respectively. In the coming years the demand growth for gas will be higher relative to the other fuels as there is an increasing focus on gas. This is largely due to environmental benefits. The demand is expected to come mainly from power plants and fertiliser units. Naphtha has grown 32% in the FY99 mainly due consumption from naphtha fired power plants.
India is an infrastructure deficit country. If we continue our economic development one can expect these sectors to grow at a faster clip and one can hope to see a larger number of gas fired plants. Further, there should be a shift in consumption of domestic fuel from kerosene to LPG. Thus one can expect the gas sector to show healthy rates of growth in the coming years and there are only a few companies to benefit from this.
GAIL (India) Ltd has announced results for the quarter ended June 2016. The company has reported 14.6 % year on year (YoY) decline in sales, while bottom-line grew 244% YoY. Here is a brief summary of the results.
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