Oil & Gas Q3 Preview- Earnings To Remain Under Pressure; Systematix Lists GAIL, Gulf Oil Among Top Stock Picks

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Systematix Research Report

For Q3 FY25, our gas sector coverage universe’s Ebitda is expected to decline sharply 17% YoY (-7.9% QoQ) to Rs 60.7 billion largely led by lower margin for city gas distributions and weaker profit from GAIL India owing to lower trading profit.

On CGDs, Indraprastha Gas and Mahanagar Gas are expected to report a volume growth of 9%-11% YoY while Gujarat Gas’s volume is estimated to remain flattish. However, lower allocation of APM gas would lead to lower gross margin despite price hikes taken during the quarter.

Higher Henry Hub gas price and lower spread over Brent are likely to hurt GAIL’s earnings. Reliance is expected to benefit from higher GRM, better petrochem spread and higher telecom tariff while Retail business to see a modest growth.

Gulf Oil, however, is expected to report a healthy growth owing to higher volume and lower base oil price. Further, Petronet LNG is also estimated to report healthy numbers on the back of higher volumes at Dahej. We keep Reliance Industries, GAIL, Petronet LNG and Gulf Oil as our top picks in the sector.

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