The country’s oil marketing companies are expected to register strong earnings in the third quarter of the fiscal year on the back of healthy retail margins on diesel and gasoline led by a decline in crude oil prices, as per analysts.
Elara Capital expects OMC’s retail margin on diesel to increase to Rs 9.3 per liter against Rs 0.4 per liter last year and Rs 5.8 per liter in the previous quarter. The retail gasoline margin may jump to Rs 12.8/liter against Rs 7.8/litre in the same period last year and Rs 9.4/liter in the previous quarter.
“We expect gross refining margins for PSU (public sector undertakings) refiners – Bharat Petroleum, Chennai Petroleum, Hindustan Petroleum, Indian Oil, and MRPL – to average at $5.1 per barrel in Q3FY25E from $1.6 per barrel in Q2FY25 and $9.3 per barrel in Q3FY24,” the brokerage said.
It also expects the average crude inventory gain in the third quarter to be $0.3 per barrel against the loss of $2.7/bbl in the previous quarter.
“We expect EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for oil & gas companies to grow 7% on year and 31% sequentially in Q3FY25E, led by strong retail diesel and gasoline margin for OMCs, though partly offset by LPG losses and weaker gross refining margins from last year,” Elara Capital said in its preview.
For the public upstream sector, analysts expect crude oil realizations to remain stable from last year at $72.6 per barrel, but down 2% from the previous quarter.
Elara Capital sees Oil India’s crude production to grow by a marginal 1% from last year, while gas production is set to be flat due to a delay of a few quarters in Indradhanush Gas Grid gas pipeline connection and constraint in demand from the North-East (until the expansion of Numaligarh refinery by Q3FY26).
“We expect ONGC’s EBITDA to grow 7% YoY in Q3FY25E amid lower statutory levies,” it said.
While OMCs are likely to register a healthy Q3FY25, the country’s city gas distribution (CGD) companies may see a mixed trend. Analysts expect companies with higher CNG contribution to see a sharp drop in EBITDA per scm (standard cubic meter) margin from last year’s levels due to lower domestic gas allocation by GAIL.
“We expect EBITDA to grow a sharp 20% on year for Gujarat Gas due to base effect (weak EBITDA/scm margin in Q3FY24), with volume growth at 5% and EBITDA/scm margin at Rs 5.4/scm (up 13% YoY). EBITDA for Indraprastha Gas and Mahanagar Gas is set to decline 14% on year and 18% on year, respectively, led by a 21-26% decline in EBITDA/scm margin, though partly offset by a 9-10% volume growth,” Elara Capital said.
State-owned natural gas company GAIL is likely to register a 6% fall in its EBITDA during the quarter under review from the same period of last fiscal due to normalization of gas marketing margin. However, analysts believe that the decline in EBITDA will be partly offset by rising transmission earnings and improved realization in LPG & liquid hydrocarbon segments.
“We expect Petronet LNG to post an EBITDA drop of 33% YoY as the base quarter had exceptional gains from take or-pay provision,” said the brokerage. “LNG import volume is likely to fall 3%.”