Buy Reliance Industries, target of Rs 1440: Angel Broking

Angel Broking has maintained its buy rating on Reliance Industries with a target price of Rs 1440 in its March 23, 2009 research report. “Reliance Industries, RIL may finally get to use the gas it produces. The government is likely to alter the Gas Utilisation Policy to allow the company to use some of the gas that will start flowing from its D-6 block in the Krishna-Godavari (KG) basin weeks from now. Under the Gas Utilisation Policy, RIL can’t use its own gas.

This could now change as the empowered group of ministers (EGoM), meeting this week, may consider allocating some gas for RIL’s captive use. The group is empowered to take a decision on issues related to gas pricing and its utilisation. RIL is expected to use the natural gas for its captive power projects, apart from other industrial uses. Allowing RIL to use some of its gas could set the precedent for other gas producers in future as well. RIL’s initial gas production will be 10mmscmd increasing to 40mmscmd going ahead. In the second phase of the field’s development, peak production is scheduled to go up to 80 mmscmd.”

“While the EGoM has listed top-priority customers for distribution of first 40 mmscmd gas, there is a case for allowing contractor (RIL) to use some of it in the second phase. The government’s new licensing policy for exploration blocks gives oil companies freedom to market oil and gas and sell it at market price. However, the government interfered with the contractor’s (RIL) marketing freedom, and specified priority sectors for the supply of the gas due to the unprecedented demand and short supply of natural gas in the country. RIL recently abandoned a plan to put up a power plant based on its KG basin gas because it had been kept out of the list of initial customers. The company ended up cancelling orders for boilers and turbines. This is positive for RIL. We maintain a Buy on the stock, with a target price of Rs 1,440. This development is also expected to benefit GSPL as it will be transmitting this volume for RIL’s captive use,” says Angel Broking’s research report.

Tags: calls, daytrading, free calls, intraday, tips

Similar Posts:

• Buy Reliance Industries, target of Rs 1440: Angel
• Accumulate Reliance Industries: Prabhudas Lilladher
• Hold Reliance Industries, target of Rs 1900: Sharekhan
• Buy Exide Industries, target of Rs 61: Angel Broking
• Accumulate Reliance Comm; target of Rs 244: Angel Broking