The Indian oil and gas sector, home to some of Dalal Street's largest firms, is poised to announce a powerful operational performance for the third quarter of the financial year 2025-26 (Q3 FY26). Analysts project this strength will be spearheaded by oil marketing companies (OMCs) and the conglomerate Reliance Industries Limited (RIL), setting a positive tone for the sector's earnings season.
Refining and Marketing Giants Take the Lead
Oil refining and marketing companies are anticipated to be the standout performers this quarter. This optimism stems from a 10% year-on-year decline in average crude oil prices, even as retail fuel sales volumes held steady. The key metric of refining profitability, Singapore Gross Refining Margin (GRM), improved significantly to $4.9 per barrel in Q3FY26 from $4 per barrel in the previous quarter, driven by sustained strength in transportation fuels like petrol and diesel.
Brokerage firm Nuvama Institutional Equities forecasts that the aggregate EBITDA for the oil and gas sector could leap by 17% year-on-year, primarily fueled by OMCs, RIL, and city gas distributors. Similarly, Prabhudas Lilladher (PL) Capital projects the sector's Q3 EBITDA to grow by over 13% YoY.
Nuvama specifically estimates that EBITDA for OMCs could surge by a remarkable 68% year-on-year, citing strong GRMs and reduced losses (under-recoveries) on domestic LPG sales. Kotak Institutional Equities (KIE) notes that refining margins will be sharply higher due to elevated product cracks, though marketing earnings may be weaker. KIE expects OMC EBITDA to rise 9-18% sequentially, which translates to a massive 31-141% increase compared to the same period last year.
PL Capital adds that while marketing margins for OMCs may stay under pressure, the solid refining margins provide clear earnings visibility. Consequently, the brokerage has upgraded its FY27 earnings per share (EPS) estimates for OMCs by 5–6%.
Reliance Industries: A Dual Engine of Growth
Brokerages are also bullish on Reliance Industries' upcoming results, expecting strong contributions from both its oil-to-chemicals (O2C) and digital services segments. Nuvama estimates a 9% year-on-year rise in RIL's consolidated EBITDA, powered by a robust O2C and digital performance, though partially offset by slower growth in retail and upstream oil & gas.
The firm further states that O2C EBITDA alone is likely to jump 13% year-on-year, supported by a 21% YoY growth in Singapore GRM led by healthy petrol and diesel spreads. Kotak Institutional Equities aligns with this view, projecting a 9.3% YoY increase in RIL's overall EBITDA, with O2C EBITDA rising 15% YoY on better refining margins and a weaker Indian Rupee, despite weakness in the petrochemicals business.
Upstream and Gas Utilities Face Headwinds
In contrast to the downstream players, upstream exploration and production companies are expected to face earnings pressure. The decline in global crude oil prices is likely to weigh on their realizations. According to PL Capital, upstream majors ONGC and Oil India are projected to report a combined EBITDA of ₹17,460 crore for Q3, marking an 8.2% decline quarter-on-quarter. Kotak pegs ONGC's EBITDA decline at 10% YoY and Oil India's at 2.7% YoY.
The picture is mixed for gas utilities. Companies like GAIL (India) Ltd. are expected to see a 7% year-on-year decline in EBITDA, as per Nuvama, due to weak petrochemical margins and lower LPG realisations. Petronet LNG's EBITDA is likely to remain flat. However, city gas distributors (CGDs) like Indraprastha Gas Limited (IGL) may report better numbers. Nuvama expects IGL and Gujarat Gas Ltd. (GGL) to see EBITDA per standard cubic meter (scm) rise 7% YoY, aided by lower operating expenses and softer spot LNG prices. Kotak adds that benefits from lower Gujarat VAT and a low base in the previous year will likely support IGL's performance.
Disclaimer: This analysis is for informational purposes only. The views and recommendations expressed are those of individual analysts or broking firms. Investors are advised to consult certified experts before making any investment decisions.
