Oil, Gas Q2 Results Preview - Mixed Quarter Anticipated: PL Capital

PL Capital Report

Operating profit of the oil and gas sector in India is expected to remain flat QoQ to Rs 855 billion. Realizations of upstream companies like Oil and Natural Gas Corporation Ltd. and Oil India Ltd. are expected to decline marginally QoQ amid fall in crude oil prices with net crude realisation at $73.8/barrel of oil post windfall tax, while gas realization at $6.5/metric million British thermal unit to remain unchanged QoQ.

ONGC’s production is likely to decline marginally QoQ, while Oil India’s production is expected to improve. City gas distributions are expected to report better operating profit amid price hikes undertaken by them. OMCs are likely to report weak gross refining margins, but gross marketing margins are expected to come in strong.

We expect operating profitability of RIL’s O2C segment to remain weak on account of weak refining margins, and petchem spreads to remain weak.

We build in steady telecom performance on the back of tariff hike with an average revenue per user of Rs 194; retail revenue growth is also expected to be steady. Oil India remains our top pick in the sector.

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