Morgan Stanley has the following view on the Indian Oil & gas Energy Sector,
We reiterate our Overweight call, and raise our price targets for all the Indian government-owned oil companies because we believe valuation for the overall sector looks reasonable; and the government is taking the right steps towards total de-control of petroleum sector. Our three top OW rated stocks are Oil & Natural Gas Corp. (ONGC.BO, OW, Rs1,286.1), GAIL (GAIL.BO, OW, Rs465.1) and Bharat Petroleum Corp. (BPCL.BO, OW, Rs659.15).
The government has taken two significant steps toward de-control of the oil sector: 1) it rasied the Administered Price Mechanism (APM) based gas price from Rs3,200/tscm to Rs6,818/tscm; and 2) it kick-started petroleum product price reforms by deregulating petrol prices at the retail pump level, and raising kerosene, LPG and diesel prices. All this in our eyes calls for a re-rating of the sector.
