No diesel price hike is bad news for OMCs: Avinnash Gorakssakar

In an interview with ET Now, Avinnash Gorakssakar, Head of Research, Miintdirect.com, gives his views on the impact of no diesel price hike and more. Excerpts:





ET Now: With the government ruling out diesel price hike, do you expect more pressure on OMCs?

Avinnash Gorakssakar: Definitely. This is a negative news for all the oil marketing companies. If a diesel price hike is ruled out now, under-recovery (which is a very large component on diesel) will make OMCs bleed significantly. This was not expected at this point of time. On the fundamental side, this is going to spell bad news. Not only the Q2, but even the coming Q3 quarter would definitely be impacted. Both from a short term as well as from a medium-term point of view, these would be definitely stocks which investors should keep away.

ET Now: With the coal auction being cleared by the CCEA, what is the way forward in the long term for some of the power companies?

Avinnash Gorakssakar: This is positive news. Larger players would stand to benefit. Ground activity would be more important to be watched and then what is the kind of progress on existing as well as upcoming projects because clearly in the power space, we have seen a lot of slow moving actions from the government’s side, but nevertheless, this definitely is a good sentiment booster for stocks like BHEL or typically Tata Power. Clearly large players in this space would benefit.