In CGDs, margin expansion is expected on the back of lower gas costs, higher APM allocation, rupee appreciation, and CNG price hikes.
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Systematix Report
In Q1 FY26E, the aggregate operating earnings for our gas sector coverage universe is expected to decline 25.9% YoY/-2.9% QoQ while CGDs are expected to outperform with just -2.1% YoY/+13.5% QoQ. Brent crude averaged at $66.8/bbl, down 10.9% QoQ while GRM improved to $5.7%, up 84% QoQ.
Spot LNG prices was also lower 12% to average $12.4/mmbtu (+11% YoY). Gross marketing margins improved significantly on lower crude oil price as Petrol/Diesel GMM came at Rs12.4/ltr and Rs10.3/ltr (up 20.4%/51.5% QoQ) respectively.
Reliance Industries Ltd. is expected to deliver flattish sequential performance, supported by better O2C and higher Digital Services profits, offset by lower QoQ profits from retail business.
In CGDs, margin expansion is expected on the back of lower gas costs, higher APM allocation, rupee appreciation, and CNG price hikes.
Petronet LNG volumes are expected to take a hit on account of higher utilisation of Dabhol terminal. GAIL India Ebitda is expected to fall 33% YoY on lower transmission volume, weak trading profits and lower profits from LPG and petchem segments. We remain positive on GAIL. Our Buy call (top picks) on Mahanagar Gas and RIL has done well and would revise our rating post the Q1 FY26 result.
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