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ICICI Securities Report
The 12 oil and gas companies under our coverage are likely to deliver strong YoY performance in Q1 FY24E. We expect aggregate operating earnings (Ebitda) to surge 73% YoY to Rs 968 billion and net income 138% YoY to Rs 502.0 billion.
However, the trend may not be uniform with very strong YoY performance from oil marketing companies and city gas distribution companies partly offset by muted trends in upstream companies, gas utilities and Reliance Industries Ltd.
QoQ performance is likely to be far more muted with only a 4% jump in Ebitda and a 6% QoQ decline in net earnings. This would be partly due to a very strong base for RIL, OMCs and the CGDs in Q4 FY23 and seasonal variances. RIL is likely to see muted earnings due to softer oil to chemical margins and relatively slower growth in RJio.
For upstream, softer crude prices and the new gas price formula are likely to result in weaker realisations – leading to a decline in net earnings by 51% YoY and 23% QoQ.
OMCs may be the standout sub-segment in Q1 with expected Ebitda of Rs 365 billion and profit after tax of Rs 221 billion to be sharply better than operating loss of Rs 170 billion and net loss of Rs 185 billion in Q1 FY23.
CGDs appear set to benefit from the reduction in both domestic gas costs and softer spot liquefied natural gas prices; their Ebitda and profit after tax look poised for strong growth aided by better volume growth as well.
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