Oil and gas stocks gain on strong growth hopes

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Mumbai | Published: April 10, 2018 2:19:02 AM

Share prices of oil and gas companies closed the session on a high note on Monday after brokerages and corporate rating agencies said that earnings growth in Q4FY18 will largely be driven by commodity markets, wherein oil & gas would be one of the sectors driving the growth.

oil, oil and natural gas, stocksWhile Edelweiss in a report pointed out that oil marketing companies are expected to deliver a top line growth of over 20%. (Reuters)

Share prices of oil and gas companies closed the session on a high note on Monday after brokerages and corporate rating agencies said that earnings growth in Q4FY18 will largely be driven by commodity markets, wherein oil & gas would be one of the sectors driving the growth.

The S&P BSE Oil & Gas index ended the session 1.52% higher at 15,048.92 points and the S&P BSE Energy index ended the session 1.14% higher at 4,060.33 points on Monday, even as the benchmarks, Sensex and Nifty, ended the day with moderate gains of just under 0.5%.

“We expect a 10% y-o-y growth in earnings in Q4, largely driven by strength in commodities sectors (oil & gas and steel) and domestic autos (excluding JLR),” Surendra Goyal, analyst at Citi, said in a report.

While Edelweiss in a report pointed out that oil marketing companies are expected to deliver a top line growth of over 20%. “The aggregate revenue of companies in the petrochemicals segment is slated to rise 21- 23% on-year, due to an improvement in petrochemicals realisation and due to a rise in feedstock naphtha prices following higher crude oil prices,” said Crisil in a report.

In the S&P BSE Oil & Gas index, BPCL led the rally, gaining 3.64% to end the session at `449.90. HPCL, IOC, Indraprastha Gas, Petronet LNG, ONGC, RIL and Castrol India were the other prominent gainers. “Growth is largely driven by commodity sectors — in fact, earnings growth for Citi universe excluding oil & gas and metal sectors is flat YoY,” added Citi in its report.

“We expect the energy sector to clock an overall strong quarter post a subdued Q3. Also, marketing segment of OMCs will be strong following significant retail price hikes. GST headwinds, sustained ramp-up in private competition and digital discounts are likely to continue to weigh on OMCs,” Edelweiss added.

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