ONGC biggest beneficiary from diesel subsidy cut: Anish Damania

In a chat with ET Now, Anish Damania, Head-Institutional Equities, IDFC Securities, shares his view on the oil and gas sector.

ET Now: Interesting moves when it comes to the oil and gas pack. One of course the crude cool off benefiting and secondly, it seems like there is going to be a decisive decision this time around on the gas pricing too. What is the sense that you are getting about the demand one is seeing of late for names like an ONGC or for that matter even Reliance, also the entire OMC basket?

Anish Damania: So petrol prices have already been in line with the market prices. So as the crude prices have fallen from a high of about $113-114 to $102, there is a correction even in the petrol prices which have been coming up. So we have seen two cuts in petrol prices come up. Diesel on the other hand continued to be subsidies. So they want to bridge that gap as much as possible. So this allows them to bridge that gap quicker than expectations. So the increase in diesel price is also good because that reduced the subsidy and as far as ONGC is concerned, they would be the major gainers of any cut in subsidy because they will have to bear that much less burden. So if one were to look at that, then ONGC is the biggest gainer in this. As far as Reliance is concerned, Reliance is more a function of how the GRMs are behaving and how the differential between crude and light crude is behaving. the more the difference the better is the outlook for Reliance. So at this point of time, Reliance till the time gas pricing is decided, we will see that trade about current levels or little bit higher. But in case of ONGC, definitely subsidies are falling. So they are the major beneficiaries there and that story continues and if gas pricing comes up, that will be an added benefit to ONGC.