Oil prices have been moving higher in recent weeks. The rise is being driven by supply concerns and geopolitical tensions. The Iran conflict has raised fears of disruption in key shipping routes like the Strait of Hormuz. At the same time, signals from OPEC+ suggest controlled output. Lower inventories and steady demand are also adding pressure. All of this is pushing crude prices upward.
For most companies, this is not good news. Higher oil prices increase costs. Transportation becomes expensive. Margins come under pressure. Demand can also slow down if inflation rises. But this is not true for everyone. There are certain businesses that actually benefit when oil prices move up.
The companies selected here fall into that category. Their earnings are directly linked to crude prices or energy flows. They tend to see better realizations when oil rises. Their business models are aligned with higher energy prices. This makes them natural beneficiaries in such a cycle.
#1 Oil and Natural Gas Corporation (ONGC): Leveraging Deepwater Gains and Record Dividends
Oil and Natural Gas Corporation (ONGC) is the largest crude oil and natural gas Company in India, contributing around 71% to Indian domestic production.
ONGC reported a steady operational performance in Q3 FY26, even as crude prices remained volatile during the period. Net profit rose 23% year-on-year (YoY) to Rs 11,946 crore, supported by subsidiaries. Revenue, however, remained largely flat at Rs 1,67,423 crore due to lower crude realizations, as average oil prices fell during Q3.
The quarter reflects how sensitive earnings remain to crude price movements. While lower oil prices weighed on revenue, improved gas realizations and cost control supported profitability. This becomes relevant in the current environment, where rising crude prices could directly improve realizations and support earnings momentum for upstream players.
The Deepwater Edge: KG-98/2 and Future Output Targets
On the operational front, the company continues to push production growth through a mix of new projects and field optimisation. The KG-98/2 deepwater project has seen major infrastructure completion, with gas production expected to start from early FY27 and ramp up steadily. The Daman Upside Development Project is also nearing monetisation, with peak gas output of 4–5 MMSCMD expected. In parallel, redevelopment efforts in mature assets like Mumbai High are showing early gains, with decline rates being arrested and production turning positive.
ONGC is also executing a large capital expenditure programme of around Rs 77,000 crore across more than 20 projects. These include development, redevelopment, and infrastructure upgrades aimed at improving recovery rates and stabilising output. Four key projects are nearing completion, which should provide near-term production visibility. For FY27, the company has guided for total output of around 42.5 MMTOE, indicating a gradual growth trajectory.
Gas Portfolio Surge: Premium Realizations Drive Margin Quality
The gas portfolio is emerging as an important growth driver. Revenue from new well gas has crossed Rs 5,000 crore in nine months, contributing over 18% to total gas sales. This segment earns a premium over regulated prices, improving margins. The share of such gas is expected to rise further, adding to earnings quality going ahead.
On the global front, ONGC Videsh continues to maintain its presence across key assets. Projects in Mozambique are back on track after earlier disruptions, with LNG production expected to begin from FY28. In Russia’s Sakhalin project, operations remain stable and the company has secured its equity stake, while developments in Venezuela remain linked to geopolitical easing.
The company has also taken steps to improve efficiency. A structured cost optimisation programme is underway, focusing on logistics, fuel use, inventory, and manpower. These measures are expected to deliver long-term savings and support margins, especially in a volatile price environment.
Record Payouts: The Rs 12.25 Dividend Strength
ONGC continues to reward shareholders. The board declared a second interim dividend of Rs 6.25 per share for FY26, taking the total interim payout to Rs 12.25 per share so far. This marks the highest-ever interim dividend payout by the company, reflecting strong cash flows and balance sheet strength. At the current price, the dividend yield is a very attractive 4.1%.
Overall, the quarter highlights a stable operational base with improving production visibility. While earnings were impacted by lower crude prices in Q3, the ongoing upcycle in oil prices could act as a key tailwind. Execution of large projects and sustained output growth will remain critical to translating this into consistent earnings performance.
In the past year, the share price of ONGC is up 22.9%.
ONGC Share Price 1 Year Share Price Chart
#2 Oil India: Decade-High Production Meets Refinery Expansion
Oil India is engaged in exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG. It also provides various E&P related services for oil blocks.
Oil India reported a steady Q3 FY26 performance, even as lower crude realizations weighed on upstream revenue. On a consolidated basis, operating revenue remained flat YoY at Rs 8,330 crore. Profit after tax (PAT) stood at Rs 1,436 crore lower from Rs 1,457 crore reported year ago.
The quarter highlights the sensitivity of earnings to crude prices. Average crude realization declined to $ 62.84 per barrel from $ 73.8 a year ago. This impacted revenue despite stable operations. With crude prices now trending higher in April 2026, upstream players like Oil India stand to benefit from improved realizations if the upcycle sustains.
Operationally, the company maintained momentum. Combined oil and gas production stood at 1.659 million metric tonnes (MMT) in Q3. Crude output rose marginally to 0.858 MMT, while daily production touched a decade-high of 9,861 tonnes. Gas production remained stable at 0.801 billion cubic metres (BCM).
Drilling for Growth: Targeting a Century of Wells in FY27
The company is stepping up drilling activity to support growth. It drilled 19 wells in the quarter and 51 wells in the nine-month period. Management expects to close FY26 with over 75 wells, the highest ever. For FY27, the target is around 100 wells, indicating a clear push towards higher production from mature and new assets.
Downstream Integration: The Numaligarh Refinery Expansion Play
The Numaligarh Refinery expansion remains a key growth driver. The upgrade from 3 to 9 million metric tonnes per annum (MMTPA) is progressing, with commissioning of the Crude Distillation Unit (CDU) and Vacuum Distillation Unit (VDU) already underway. Stabilisation is expected by the end of Q4 FY26, with throughput likely to reach around 4 MMTPA in FY27 before scaling up further.
Supporting infrastructure is also nearing completion. The Numaligarh-Siliguri pipeline expansion has achieved mechanical completion. The Duliajan-Numaligarh pipeline expansion is expected to be commissioned by April 2026. The Paradip-Numaligarh crude pipeline has reached about 90% progress and is targeted for commissioning in Q1 FY27.
The refining segment supported overall performance. Numaligarh Refinery reported revenue of Rs 6,526 crore in Q3, largely unchanged year-on-year. However, profit rose sharply to Rs 867 crore from Rs 385 crore, a growth of over 100%, supported by higher refining margins.
Reliable Yields: The Rs 7 Dividend Strategy
The company declared a dividend of Rs 7 per share for the quarter, reflecting stable cash flows despite softer crude prices during the period. On a trailing basis, the dividend yield offered by the company is an attractive 2.3%.
Oil India is also expanding into new energy segments. In April 2026, its subsidiary signed an agreement to develop renewable energy solutions for captive use, as part of its long-term transition strategy and net-zero target for 2040.
Overall, Oil India remains closely linked to crude price movements. The recent rise in oil prices could support earnings in the near term. However, sustained gains will depend on execution of drilling plans, refinery ramp-up, and timely evacuation infrastructure.
In the past year, the share price of Oil India is up 22.1%.
Oil India Share Price 1 Year Share Price Chart
#3 GAIL India: The Strategic Pivot to Renewables and Global Logistics
Incorporated in 1984, GAIL, a Government of India undertaking, is an integrated natural gas company in India.
In Q3 FY26 the company’s revenue declined to Rs 35,173 crore from Rs 36,835 reported over a year ago. The company’s net profit also declined to Rs 1,729 crore from Rs 4,084 crore reported over a year ago, owing to declining crude oil prices.
GAIL (India). declared an interim dividend of Rs 5 per share with a record date and ex-date of February 5, 2026. The company has a long standing record in declaring dividends. It has declared dividends every year in the past 26 years. At the current price it offers a high dividend yield of 4.6%
The earnings profile of GAIL is indirectly linked to crude oil prices. Rising crude prices typically support higher gas realizations and improve transmission and trading spreads. In the current environment of strengthening oil prices as of April 2026, the company stands to benefit through better pricing dynamics and improved demand visibility across industrial and petrochemical segments.
Operationally, GAIL continues to expand its infrastructure footprint. The company operates a natural gas pipeline network of over 18,000 kilometres, forming the backbone of India’s gas transmission system. This scale provides steady volume-led growth and ensures stable cash flows, even during periods of price volatility.
Green Energy Shift: The Rs 3,800 Crore Solar and BESS Roadmap
On the expansion front, GAIL is actively investing in renewable energy. In April 2026, the company announced a 600 megawatt (MW) solar power project in Uttar Pradesh, along with a 550 megawatt-hour (MWh) Battery Energy Storage System (BESS). The project will primarily supply power to its petrochemical plant at Pata and support electrification of gas-based operations.
In a broader push, GAIL has approved investments of Rs 3,800 crore in 700 MW of solar projects across Uttar Pradesh and Maharashtra. These include a 100 MW solar project linked to its petrochemical facility in Raigad. Upon completion, the company’s renewable capacity is expected to rise significantly to over 1,000 MW from the current 147 MW.
Diversifying Revenue: From Digital Infrastructure to Global LNG Carriers
GAIL is also strengthening its global energy logistics. In April 2026, it signed a long-term charter agreement for a Liquefied Natural Gas (LNG) carrier with Alpha Gas. The vessel, with a capacity of 174,000 cubic metres, will support long-term LNG supply security and enhance its global trading capabilities.
Beyond energy, the company is exploring new business areas. In March 2026, it signed a Memorandum of Understanding (MoU) with RailTel to develop digital infrastructure and telecom opportunities. This reflects a strategy to leverage its pipeline network for fibre connectivity and diversify revenue streams.
These developments highlight a clear shift towards a more integrated and diversified energy model. The company is balancing its core gas business with renewables, logistics, and new-age infrastructure.
Steady Returns Amidst a Green Pivot
Overall, GAIL remains a steady beneficiary of a rising energy cycle. Higher crude prices can support gas-linked realizations, while infrastructure expansion provides volume growth. The near-term outlook depends on demand recovery and price trends, while long-term growth will hinge on execution of renewable projects and global LNG strategy.
In the past year, the share price of GAIL (India) is down 12.8%.
GAIL (India) Share Price 1 Year Share Price Chart
Why the Sector Trades Below Industry Medians
Let’s now turn to the valuations of the companies in focus, using the Enterprise Value to EBITDA multiple as a yardstick.
Valuations of Companies in focus
| Sr No | Company | EV/EBITDA Ratio | 5-Year Average EV/EBITDA | Industry Median | ROCE | ROE |
| 1 | Oil and Natural Gas Corporation | 4.5 | 4.0 | 11.2 | 12.0% | 10.6% |
| 2 | Oil India | 8.7 | 4.4 | 12.2 | 12.9% | 13.3% |
| 3 | GAIL (India) | 8.1 | 7.4 | 14.0 | 14.0% | 13.1% |
In terms of return ratios, all three are fairly close. ONGC has a return on capital employed (ROCE) of 12.0% and return on equity (ROE) of 10.6%. Oil India is slightly higher with a ROCE of 12.9% and ROE of 13.3%. GAIL is a bit better on this front, with a ROCE of 14.0% and ROE of 13.1%.
On valuations, they are still below the industry levels. ONGC is trading at an EV/EBITDA of 4.5, almost in line with its 5-year average of 4.0 and much lower than the industry median of 11.2. Oil India is at 8.7 times, higher than its 5-year average of 4.4 but still below the industry median of 12.2. GAIL is at 8.1 times, slightly above its average of 7.4, but again lower than the industry median of 14.0.
The rise in crude oil prices is the main reason these stocks are being watched now. When oil prices move up, upstream companies tend to earn more. It also improves sentiment across the energy space.
Each of the three plays a different role. One is more directly linked to oil prices. Another is also exposed to oil but is trying to improve production. The third is more into gas transmission and trading, so its earnings are relatively steady.
Overall, the numbers look reasonable. Valuations are not high and return ratios are holding up. With oil prices rising again, the next few quarters will be important to watch.
Conclusion
Overall, the sector is getting attention because oil prices have moved up again. That usually helps earnings for these companies. At the same time, valuations are still below industry levels and return ratios are steady, so the numbers don’t look stretched.
But this is still a cycle. Oil prices can change quickly. If prices stay high, earnings can improve. If they fall, the impact shows up fast. Also, these three businesses are not the same. One is more tied to crude, another is trying to grow production, and the third earns from gas transmission and trading. So, they may not move in the same way.
For someone tracking these stocks, it may make sense to spend some time observing how things play out from here. The next few quarters should give a clearer idea of how earnings respond to higher oil prices and whether that sustains.
Instead of reacting to the current momentum, it may be more useful to focus on actual performance. Watching how revenues, margins, and production trends move can help in taking a more informed view over time.
You can track how these are progressing by adding stocks to your watchlist.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep dive into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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