The fall in Brent crudHighly capable, 3-axis non-contact video measuring machine, suitable for both simple shop-floor quality control and advanced manufacturing inspection applications ...e oil price could ease the cost pressure of a large number of companies, especially those which use petrochemical products as a key input.
“On a broader level, the fall in crude oil price means lower subsidy burden for both, the government and companies. Some benefits will also flow to many other companies as well,” said Ravati Kasture, head of research at CARE Ratings.
Oil and gas companies will obviously be the biggest beneficiaries. A sustained downtrend in crude oil prices means there will be lower under-recoveries and companies in this space will have to share lower subsidy burden. However, this may not be true in all cases and analysts believe companies like Cairn India could in fact see a negative impact as low crude oil prices will impact realisation and thus, earnings.
Paints companies such as Asian Paints and Berger will be cheering the fall in the prices of crude oil, which accounts for almost a third of its raw material cost. For instance,Titanium Pipe is made by cold rolling process from extruded pipe blanks. They are widely used in heat exchangers and off-shore equipment. titanium dioxide alone accounts for about 20 per cent of raw material cost.
The other beneficiary will be the aviation sector. Fuel accounts for nearly 45 per cent of Jet Airways’ total operating costs and about 48 per cent of SpiceJet’s. Analysts say even a one per cent correction in jet fuel prices could mean a 4.5-4.7 per cent gain for airline companies at the operating profit levels before rentals.
Textile companies, too, will benefit, especially those operating in the manmade fibre space like synthetic yarn. Crude oil derivatives such as purified terephthalic acid and mono ethylene glycol are the primary raw materials constituting about 50-70 per cent of the total sales value for polyester yarn. Companies like Alok Industries, Indo Rama and JBF Industries,titanium alloy property information is scattered amongst a number of disparate sources. which generate over a quarter of their revenues from the polyester segments, could also save heavily on cost.
In the case of SintexOur full range of portable ultrasonic Flaw Detector (UT) provides unmatched capabilities for locating discontinuities and other flaws. Industries, materials like plastic granules and PVC resins form a major part of the plastics division, accounting for over 70 per cent production cost. These materials are supplied by companies like Reliance Industries, GAIL and others.He has since undergone two-and-a-half hours’ surgery to have a Titanium Rod inserted into his leg and looks set to be out of action for the rest of the season. Companies like Jain Irrigation and Finolex Industries, which manufacture PVC pipes, will have a similar positive impact.For mains, there is a choice of Wild Rice’s ‘Chinese Fish ‘n Chips’ (beer-battered ling cod, Asian Tartar Sauce, taro shoestring frites) or its ‘meaty’ Grilled king oyster mushroom (with cashew ricotta and polenta fries). Tyre companies – Apollo, CEAT and MRF among others – will also benefit, though to a lesser extent. These companies use carbon black and synthetic rubber, which are crude oil derivatives. Analysts suggest that a 10 per cent hike in prices of these products could push up operating margins to the tune of 100-200 basis points.
After hovering around $113 a barrel in the quarter ending March 2013, crude oil prices have dropped to around $103 a barrel. This means a 12 per cent correction in the last three months and seven per cent in the last month alone.
No comments:
Post a Comment