BSE Oil & Gas Index jumps 3%: Here's why

Business Standard

28-04-2025

Oil & Gas stocks: The BSE Oil & Gas index rose nearly 3 per cent on Monday led by a 5 per cent jump in shares of oil-to-telecom conglomerate Reliance Industries.
Other constituents of the index including Bharat Petroleum Corporation (BPCL), Indraprastha Gas (IGL), Hindustan Petroleum (HPCL), Adani Total Gas, and Gas Authority of India (GAIL) were up in the range of 2 to 4.5 per cent. Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Oil India (OIL) and Petronet LNG also gained up to 2 per cent.
At 01:15 PM, the BSE Oil & Gas index was trading at 26,480.78, up 734.07 points or 2.85 per cent. It touched intraday high of 26,551.71, up 3.12 per cent from previous session's close of 25,746.71.
The company's revenue from operations grew 10.51 per cent to Rs 261,388 crore in the reported quarter as against Rs 236,533 crore during the year-ago period.
However, in the oil and gas business, RIL's revenue fell marginally by 0.4 per cent to ₹6,440 crore. Earning before interest, tax, depreciation and amortisation (Ebitda) fell 8.6 per cent Y-o-Y to ₹5,123, impacted by lower KG D6 gas production, lower CBM price and maintenance activities.
For the entire FY25, RIL's revenue from the oil business increased 3.2 per cent Y-o-Y to ₹25,211 crore. The company reported the highest annual Ebidta of ₹21,188 crore, up 4.9 per cent Y-o-Y, driven by higher KG D6 and CBM production, constrained by lower gas prices. Ebitda margin rose 140 basis points to 85 per cent.
Prashanth Tapse, senior vice president for research at Mehta Equities says that the upswing in oil and gas stocks is primarily driven by expectations of positive quarterly earnings in the sector and positive global oil market dynamics.
"We have seen IGL delivering better-than-expected numbers, and Reliance too has reported better-than-expected results overall. In addition, there are expectations of an increase in supply, which will help crude prices remain stable and positive," he added.
Oil markets are awaiting a meeting of the Organization of Petroleum Exporting Countries and allies (Opec+) next week as members of the cartel are expected to increase production for a second straight month, with higher production volumes expected to help offset the impact of lower prices. Opec+ has also been raising production in line with Trump's calls for higher output and lower oil prices.
Shares of other oil and gas companies including Adani Total Gas, ONGC, BPCL and Indian Oil were trading in the green ahead of the Q4 results announcements as these companies are scheduled to declare the quarterly results this week. HPCL will announce its Q4 and FY25 earnings on May 6, 2025.
Indraprastha Gas reported better-than-expected Q4 results which also boosted the investor sentiment around the stock. The company's standalone net profit declined 9 per cent Y-o-Y to ₹349.23 in the reporting quarter against ₹382.80 in the same quarter of the previous fiscal. However, revenue from operations stood at ₹3,950.57 crore, up 10 per cent Y-o-Y from ₹3,596.79 crore in Q4 FY24. The company's board recommended a final dividend of ₹1.5 per share of the face value of ₹2 each for FY25. According to analysts at Motilal Oswal Financial Services, IGL's total volumes were in-line with the brokerage's estimate at 9.18 mmscmd with both, CNG and PNG volumes, in-line with estimates. Ebitda/scm came in above the brokerage's estimate at ₹6, while realiaation increased by ~₹3/scm Q-o-Q, and gas cost/opex rose by ₹0.5/₹0.8 per scm Q-o-Q.
Increase in realisation, as per MOFSL analysts, was on account of the reversal of provisions amounting to ₹114 crore, based on negotiations with OMCs w.r.t trade margins. This led to IGL reporting Ebitda beat on estimates, at ₹500 crore (down 5 per cent Y-o-Y). The brokerage has a 'Neutral' rating on the stock as IGL shares currently trade at 15x FY26E SA P/E, while its 1-year forward long-term average is 21.1x P/E.