Bullish on Oil Marketing Companies: Nirav Sheth

In a chat with ET Now, Nirav Sheth, Head of Sales, Institutional Equities, Edelweiss Financial Services, shares his views on oil marketing companies:

ET Now: What do you do with oil marketing companies at these levels?

Nirav Sheth: Taking a slightly longer term view on oil marketing companies, any pullback in crude prices would mean little to the earnings in a sense that it is only going to impact my quarterly earnings for a one or two quarter at best.

The big picture in oil marketing companies or in ONGC is to have a pathway to predict the earnings two year out, three years out and for that I need policy intervention and some clarity in terms of how the subsidy arrangements are going to be made.

Assume that the government comes and tells me that this is what I want to do with the kerosene and LPG subsidy, and if there are ways for me to estimate the earnings, then the stocks can potentially double and you will still find them they are not expensive.

In a nutshell, we are bullish on oil marketing companies, we are bullish on ONGC.