Oil & Gas Sector Q3 Results Preview - Subdued Quarter To Set The Tone For FY23E: Nirmal Bang

Nirmal Bang Report

We expect our oil and gas universe, barring city gas distribution major Gujarat Gas Ltd. and its smaller peer Mahanagar Gas Ltd., to report a double-digit decline in Q3 FY23 earnings.

Except for Gujarat Gas and Mahanagar Gas, our estimates are below consensus. Oil marketing companies Indian Oil Corporation Ltd. and Bharat Petroleum Corporation Ltd. are likely to report 72.2%/76% YoY decline in profit after tax - worse than consensus estimates.

Hindustan Petroleum Corporation Ltd. will buck this trend, with a swing in Ebitda/profit after tax from a profit to loss.

The decline in OMC earnings is due to marketing under-recovery amid retail pump prices remaining frozen since Apr-22 and inventory losses of ~$7/barrel of oil likely from the 12.47% decline in Indian crude basket price QoQ.

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