Oil & Gas Q2 Review - Weak Margins, High Input Costs Sink Earnings: ICICI Securities

ICICI Securities Report

Q2 FY23 Ebitda for oil and gas coverage universe declined by a material 44% YoY, with profit after tax down 85% YoY for the quarter (QoQ Ebitda declined 35%, profit after tax declined 66%).

The weakness in Q2 FY23 was due to sharply lower oil marketing company earnings, with still material marketing losses and relatively lower delta from gross refining margins impacting earnings.

For gas companies, constraints on gas supply due to 2.5 million tonne liquefied natural gas stoppage by Gazprom in May 2022 and the very high gas prices resulted in a very weak quarter.

Ebitda for the six gas companies in our coverage declined 27% YoY (36% decline QoQ) with a similar 27% decline YoY in profit after tax (down 26% QoQ).

OMCs continued to see elevated losses for the second successive quarter, with Rs 201 billion of operating losses and a profit after tax loss of Rs 260 billion.

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