Oil, Gas Sector - Global Macros Remain Favorable, But Risks To Margins Deserve Attention: ICICI Securities

ICICI Securities Report

India’s general election’s results have given the ruling BJP-led NDA alliance a third consecutive stint at the helm, albeit with a lower majority than the last time. The aftermath of the lower-than-expected seat share however, has created fears of regulatory risks to the oil and gas sector, in view of the sector being PSU dominated.

We believe that near term uncertainty notwithstanding, favorable global macros, coupled with strong domestic demand and stronger pricing power is reflecting in reasonable EPS growth over FY25–27E and attractive dividend yields for our preferred plays.

We continue to like Oil India, GAIL India, Mahanagar Gas, HPCL, ONGC, Indian Oil and Gulf Oil Lubricants India within our coverage universe at these levels. Having said that, we highlight the vulnerability of stocks to pricing/margin shocks with this note.

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