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Morgan Stanley Sees Energy Upside, Highlights Three Market Surprises
Morgan Stanley studied energy companies and found several unexpected trends.
It was positive about several Indian oil and power companies.
The brokerage said coal and natural gas are becoming more important alongside renewable energy.
This is happening because electricity networks, air conditioning, and data centers need more dependable power.
India’s use of liquefied natural gas has stayed strong even though it has become much more expensive than other fuels.
Coal- and gas-powered electricity can therefore earn better spreads in some situations.
Energy companies are also investing in ships, fuel storage, trading, and energy reserves.
The article says companies are focusing more on reliable power and financial returns than on new-energy investments alone.
Morgan Stanley expressed a positive view on Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited, Oil and Natural Gas Corporation, and Adani Power.
The brokerage said coal, liquefied natural gas, and renewables are expanding more rapidly as energy shocks increase the importance of reliable access to power.
India’s liquefied natural gas consumption has remained resilient despite sharply higher costs compared with alternative fuels, according to Morgan Stanley.
Electricity spreads for coal- and gas-based generation are rising as renewable costs associated with serving the grid increase.
Energy companies are prioritizing trading, tankers, storage, reserves, and diversified investments in thermal power, renewables, and storage.
- Who
- Morgan Stanley and the Indian energy companies discussed in its assessment, including Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited, Oil and Natural Gas Corporation, and Adani Power.
- What
- Morgan Stanley identified three positive surprises in energy markets and expressed a favorable view of several Indian oil and power stocks.
- Where
- India and its power and energy markets.
- When
- The article does not specify a publication date; the assessment refers to the current energy shock and trends since Covid.
- Why
- Grid limitations, air-conditioning and data-center demand, higher gasoline demand, the shift from cooking gas to compressed natural gas, and the need for reliable power are improving pricing power across parts of the energy system.
Key facts
- Brokerage
- Morgan Stanley
- Stocks highlighted
- Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited, Oil and Natural Gas Corporation, and Adani Power
- LNG demand
- India’s LNG consumption has remained resilient despite much higher costs than alternative fuels.
- Power spreads
- Coal- and gas-based electricity spreads are rising as renewable costs to serve the grid increase.
- Capital allocation
- Companies are expanding trading operations, buying tankers, increasing fuel storage, and seeking energy reserves.
- Investment mix
- Investments are becoming more diversified across thermal power, renewables, and storage.
- Reported LNG cost difference
- The article’s introduction says LNG prices are three times higher, while a later passage says the cost is 2.5 times higher than alternatives.
Quotes
Morgan Stanley
Investment brokerage cited for the energy-market analysis
“We see the return of coal and natural gas over renewables in power systems, speciality chemical supply chains getting more competitive and cycle turning up. India remains one of a few countries still looking to grow fuel refining capacity, but cost per unit has nearly doubled, implying higher fuel refining margins.”
businesstoday.in
“It's quite surprising how India's LNG consumption has not slowed despite 2.5 times higher cost of LNG vs alternative fuels even for the power sector (although coal inventories and El Niño partly played a role)”
businesstoday.in
Sources
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