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"The move will also end the political debate around the KG-D6 gas price increase, allowing the market to focus on the company's strong medium-term earnings growth prospects," the report added.
The global investment bank maintains conviction 'buy' call on the stock with a 12-month target of Rs 1,170.
The new target price represents an upside of 36.9 per cent from Thursday's closing price of Rs 854.55.
Reacting to the news, shares of Reliance Industries (RIL) rallied as much as 2.7 per cent in morning trade. However, the stock pared some of the morning gains and was trading 1.5 per cent higher at Rs 867.80 at 09:45 a.m.
The Cabinet has allowed RIL to charge the new gas price for all its fields against a bank guarantee to be encashed if the company is found guilty of hoarding gas.
The Cabinet Committee on Economic Affairs had approved the new formula five months ago, which would double domestic prices to an estimated $8.4 per unit next April, ET reported.
Goldman Sachs is of the view that the bank guarantee may concern investors, we note it would apply only in the case it is proved that RIL is found to have deliberately not produced enough natural gas.
Petroleum Secretary Vivek Rae in an ET report said that the bank guarantee is likely to be $1.5-1.8 billion up to March 2014, for which an agreement will be negotiated with the company so that the new price can be charged by all producers from April 1.
However, RIL claims that the lower than expected production was due to geological difficulties and lower than earlier estimated reserves in the block, explains Goldman.
RIL has requested that the matter be resolved by arbitration (and through validation by international independent experts, an option which the news article reported that the oil ministry has not ruled out), added the Goldman report.
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