Oil And Gas Q3 Results Preview - Lower OMC Profits Likely To Drag Sector Profit: Anand Rathi

Anand Rathi Reports

The Indian oil sector’s Q3 operating profit would have fallen 21% QoQ to Rs 562 billion as oil marketing companies performances were hit by inventory losses (crude down ~$20/barrel of oil from end-Q2) and lower refining margins (~$3/bbl).

Oil and Natural Gas Corporation Ltd. and Oil India Ltd. are expected to report steady results given stable production volumes/realisations. GAIL India Ltd. is likely to report another strong quarter (transmission and LPG earnings) though we factor in lower gas trading earnings QoQ. City gas distribution would report healthy volume growth; absence of price hikes would impact Mahanagar Gas Ltd.

We prefer Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. as crude prices are likely to have been stable, and clarity on oil and gas realisation/volume recovery would have driven ONGC and Oil India.

We like Mahanagar Gas given much-needed volume recovery expected, which would drive a re-rating.

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