Oil & Gas Q2 Results Preview: Mixed Quarter For OMCs, Gas Distributors To See Volume Growth
Oil marketing companies are set to be impacted by a weaker refining segment, while the strong marketing margins could help support earnings.
The Indian oil and gas industry is set to report mixed results in the second quarter of the financial year 2025, with oil production companies reporting a flat Ebitda, while a weak refining segment would impact the oil marketing companies.
However, abnormal marketing margins will continue to support OMC's earnings for the majority of the July-September quarter due to the weak oil price trajectory on petrol and diesel.
Upstream Companies
Motilal Oswal expects oil production companies like Oil and Natural Gas Corp. and Oil India may report flattish Ebitda growth on an annual basis due to muted oil sales volumes. Both Motilal Oswal and Prabhudas Lilladher anticipate a decline in ONGC's gas sales volume while anticipating growth for Oil India.
ONGC's Ebitda, excluding exploration costs, could fall 11% sequentially, according to Nuvama. Nuvama expects the company's crude production to remain flat, while its gas production may decline by 4% annually.
Oil Marketing Companies
Oil marketing companies are set to be impacted by a weaker refining segment, while the strong marketing margins could help support earnings.
Benchmark Singapore's gross refining margins fell 62% year-on-year in the second quarter of fiscal 2025. This could lead Bharat Petroleum Corp., Indian Oil Corp. and Hindustan Petroleum Corp. to report gross refining margins of $7, $5.5, and $5.5 per barrel, respectively, according to Nuvama. This stands lower than the $13-18 range a year ago.
As per Motilal Oswal, standalone Ebitda of HPCL, BPCL, and Indian Oil could increase 2.2 times, 38% and 3%, respectively, on a sequential basis. The growth is primarily driven by higher marketing margins on petrol and diesel, which resulted from the September dip in crude prices, with the companies earning margins in the range of Rs 10–13 per litre.
Reliance Industries
The standalone businesses of Reliance Industries Ltd., which encompass oil and gas exploration and the oil-to-chemicals segment, could potentially impact its earnings. Nuvama and Motilal Oswal expect standalone Ebitda to decline by 26% year-on-year due to weaker refining performance.
On the other hand, Motilal Oswal predicts that Jio will perform steadily, with a 19% year-on-year Ebitda increase to Rs 15,400 crore, bolstered by recent price hikes. Nuvama observes that strong performance in consumer businesses could partially offset the weak standalone earnings, forecasting a 7% annual Ebitda growth in retail due to a 10% increase in retail area.
GAIL (India)
Nuvama expects GAIL's Ebitda to surge 29% year-on-year to Rs 4,500 crore due to a rise in volumes in its transmission and marketing segments. Higher tariffs and marketing margins, coupled with an uptick in the petrochemical segment, could lead to higher realisation and utilisation, the brokerage said.
Prabhudas Lilladher expects the company's transmission volumes to fall to 129 million metric standard cubic meter of gas per day due to moderation of power demand and trading volumes in the quarter.
City Gas Distribution Companies
The operating profitability of city gas distribution companies like Indraprastha Gas, Mahanagar Gas and Gujarat Gas is likely to improve sequentially due to price hikes undertaken by them, according to Prabhudas Lilladher.
Nuvama expects IGL and MGL to see a 9% and 8% year-on-year rise in volumes, while Gujarat Gas could see a 3% fall in volumes for the same period.
