- MUMBAI: HSBC has downgraded Indian energy major Reliance Industries to “neutral” from “overweight” and cut the price target to 1,040 rupees from 1,084 rupees, citing media reports of federal investigation agency’s probe into possible dealing between Indian energy companies and the oil ministry.
The Comptroller and Auditor General’s (CAG) report said Reliance had inflated development costs on its D6 block in the Krishna-Godavari basin, two Indian newspapers reported.
The investigation could result in a freezing of bureaucratic decision-making, which would hamper Reliance’s ability to carry out exploration and production activities effectively in its blocks, HSBC said in a note.
“We fear the standoff could linger due to already raging controversy related to allocation of 2G spectrum that was brought to the fore by another Comptroller and Auditor General report,” it said.
Reliance Industries has underperformed the benchmark Sensex by 12 percent over the last three months on concerns of falling gas production from its KG-D6 block, off the Indian eastern coast, HSBC added.