Oil And Gas Q4 Results Preview - Operationally Strong Results Likely: Prabhudas Lilladher

Prabhudas Lilladher Report

In Q4 FY23, Indian oil sector’s operating profit is expected to increase by 19% QoQ to Rs 625 billion, despite factoring no subsidy benefits. Oil marketing companies’ Q4 Ebitda will likely be at Rs 203 billion led by improving marketing margins (blended margin of Rs 3.3/litre versus loss of Rs 3 in Q3) even though diesel margins will be lower (lower $14/barrel of oil QoQ).

Upstream segment profitability will be muted, given steady oil (~$75/bbl) post windfall tax and gas price of $8.6/metric million British thermal unit.

Indraprastha Gas Ltd./Mahanagar Gas Ltd. will see earnings QoQ earnings growth due to retail price changes and lower spot liquefied natural gas prices.

We expect Reliance Industries Ltd. to report operationally weak results due to lower diesel margins partly compensated by higher petchem margins. We build in steady telecom performance (up 3.3%QoQ revenue growth) as we build in 2.1%QoQ average revenue per user growth. We also build in healthy retail revenue growth.

For results, OMCs will benefit from sharp recovery in marketing margins while Indraprastha Gas will gain from drop in spot LNG prices.

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