Integrated oil firm positive for ONGC

Acquisition of a strong downstream business with stable cash flows should boost overall valuations

The news flow around a possible merger of Hindustan Petroleum (HPCL) with Oil and Natural Gas Corporation (ONGC) has recently got stronger, even as some believe that a merger with Bharat Petroleum Corporation (BPCL) will be more beneficial for ONGC. The Union Budget announcement over creation of an “integrated oil and gas company” has led investors and analysts to explore possible structures while making guesses on the companies that could be merged in the process. Whatever be the case, a merger of an oil marketing company (OMC) with ONGC will prove beneficial for the latter, though it may not necessarily