Oil & Gas: Best Performance In 7 Years
Oil and gas stocks unscathed by demonetisation.
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The one sector that has remained unscathed by the government's cash ban is oil and gas. The BSE Oil & Gas Index, which was trading with gains of 24.6 percent until November 8, is now up 24.9 percent year-to-date. And the index is set to make its biggest annual gain since 2009.
On the other hand, Brent crude surged 48.5 percent this year. Oil and gas exploration companies like ONGC and Oil India benefitted from rising crude oil prices and lower subsidy burden.
Brent crude prices will average $55 a barrel in 2017, according to the median of analyst estimates compiled by Bloomberg, compared to $44.8 in 2016.
The BSE Oil & Gas Index is trading at an EV/EBITDA ratio of 6.03 for 2017, which is the lowest in more than 13 years, suggesting room for further upside.
Like the P/E ratio, the EV/EBITDA ratio is a measure of how expensive a stock is. The ratio measures the price (in the form of enterprise value) an investor pays for the benefit of the company's cash flow (in the form of EBITDA).