Oil marketing companies reported Ebitda/PAT of Rs 312.5 billion/Rs 178.8 billion for Q2 FY26 – up 2.8x/8.9x YoY (+5%/11% QoQ). The three CGDs – Indraprastha Gas, Gujarat Gas and Mahanagar Gas – delivered weaker earnings in Q2 FY26.
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Q2 FY26 Ebitda/PAT improved 33%/36% YoY and 3%/9% QoQ, respectively, for our oil and gas coverage universe. The rise in Ebitda was driven by strong YoY growth seen in the OMCs, Reliance Industries and GulfOil Lubricants, with gas companies/upstream reporting weaker earnings.
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Strong refining margins, decline in LPG under-recovery and improvement in RIL's consumer segments drove the YoY operational improvement, even as retail fuel margins saw some YoY softness for the OMCs.
A further decline in APM allocation raised gas costs and dragged margins for city gas distributions.
Lower crude realisations impacted upstream earnings, with one-off factors impacting Oil India's production as well.
We remain positive on downstream names and selective on the gas space; but upstream may remain under pressure in the near term.
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