The Indian oil and gas sector is headed for a robust Q1FY26 earnings season, with aggregate EBITDA likely to grow 17 per cent YoY. The gains are driven by strong refining performance, even as other segments face pressure. According to Nuvama, the surge will be supported by strong performance from Reliance Industries Ltd (RIL) and state-run oil marketing companies (OMCs). Meanwhile, upstream producers like ONGC and GAIL and gas utilities are expected to witness a weaker quarter amid softer crude prices, production declines, and structural gas headwinds.
Reliance Industries: All-round strength, barring E&P
RIL’s consolidated EBITDA, Nuvama stated, is expected to grow 16 per cent YoY, driven by strong performance across key segments except Oil & Gas. O2C EBITDA may rise 19 per cent YoY, supported by a sharp jump in Singapore GRM (+62 per cent YoY) and better petrochemical margins. Jio (Digital) is expected to post a 19 per cent YoY and 3 per cent QoQ EBITDA increase, led by higher ARPU (+15 per cent YoY) and modest subscriber growth. Retail EBITDA is likely to grow 19 per cent YoY, aided by a 25 per cent rise in realisations, though slightly offset by a 2 per cent drop in retail space. Oil & Gas EBITDA may decline 10 per cent YoY due to a 9 per cent drop in production.
OMCs ride the crude slide
Meanwhile, OMCs (HPCL, BPCL, IOCL) are expected to report 52–72 per cent EBITDA surge, courtesy of a sharp jump in auto fuel marketing margins and improved refining spreads.
Nuvama said, “Fuel retail margins shot up in Q1 amidst a sharp fall in crude prices, but somewhat offset by the Rs 2/l excise duty hike in Apr-25.” Crude price softness, it added, boosted fuel margins even as GRMs moderated sequentially due to inventory losses. BPCL is forecasted to lead with a 52 per cent QoQ jump, followed by HPCL at 69 per cent and IOCL at 24 per cent.
In contrast, upstream players ONGC and Oil India are likely to witness an 8–14 per cent QoQ EBITDA decline, due to 5 per cent YoY fall in production and sharp cut of 22 per cement YoY in Brent partially offset by lower statutory levies (-39 per cent YoY) due to removal of windfall cess.
Gas segment loses steam
Gas utilities turned out to be the clear laggards this quarter with EBITDA projected to drop by 10 per cent YoY.
According to Nuvama estimates, GAIL’s EBITDA is likely to remain flat QoQ but decline 32 per cent YoY, impacted by weak trading margins and muted gas demand.
City gas players such as IGL and MGL are likely to post mixed trends with IGL estimated to clock an 8.3 per cent QoQ EBITDA growth on CNG price hikes. However, Nuvama said, both companies continue to face long-term risks from declining APM gas allocations and regulatory uncertainty.
Meanwhile, Gujarat Gas’ (GGL) volumes are likely to dip 19 per cent YoY due to weakness in its industrial volumes partially offset by CNG volume growth. “We expect the latter to be offset by weaker margins due to a rise in input gas cost on de-allocation of APM gas to CGDs and higher spot LNG (+12 per cent YoY),” Nuvama said. EBITDA, meanwhile, is expected to remain flattish QoQ and down 10–13 per cent YoY.
Further, Petronet LNG Limited (PLNG) EBITDA is expected to drop by 20 per cent on-year on lower Dahej plant utilisation at 89 per cent. Gujarat State Petronet Ltd (GSPL), meanwhile, is expected to witness EBITDA slide by 38 per cent YoY on a 9 per cent/ 15 per cent YoY fall in tariff/ volumes in the wake of lower power demand.
Strategy & valuation outlook
The pecking order for Q1 is clear: RIL and OMCs will lead the growth chart in Q1FY26, while gas utilities and transmission players struggle amid structural headwinds. While the refining segment benefits from global tailwinds, per brokerages, volatility in gas pricing, weak industrial demand, and regulatory shifts are clouding prospects for the rest.
JM Financial and Nuvama remained constructive on RIL, and reiterated BUY on ONGC, Oil India, GAIL, and Gujarat Gas, on the back of volume upside and medium-term demand optimism. However, they maintained a cautious to negative stance on OMCs and CGDs.