India’s oil and gas industry is set to post robust growth over the next two fiscal years despite facing significant volatility in global energy markets, according to a new research note from Systematix Institutional Equities.
Forecast: Solid Sales and Profit Growth Ahead
Systematix projects that oil and gas sector companies under its coverage are likely to record strong year-on-year growth for FY26E and FY27E:
FY26E:
*Sales: +6.0%
*EBITDA: +12.9%
*PAT: +13.3%
FY27E:
*Sales: +7.8%
*EBITDA: +9.0%
*PAT: +10.1%
The research identifies Reliance Industries Ltd (RIL), GAIL (India) Ltd, Mahanagar Gas Ltd (MGL), and Gulf Oil Lubricants India Ltd (GOLI) as its top investment picks in the sector.
Crude Oil Prices Dip, But Refining Margins Rebound
Despite global market turbulence in May 2025, Indian companies benefited from improving refining economics. Brent crude oil prices:
*Declined 22.9% year-on-year
*Dropped 3.8% month-on-month
This was primarily due to increased OPEC output, particularly from Saudi Arabia and the UAE. The oversupply also led to a drop in global liquid demand, causing a pullback in U.S. rig counts, signalling reduced upstream activity.
However, this downturn in crude prices was offset by a sharp recovery in refining margins. Benchmark Gross Refining Margins (GRMs) surged:
*+85% month-on-month
*+121% year-on-year
*Averaging USD 6.4 per barrel
This rebound was supported by lower input costs and strong product cracks across key segments such as gasoline, gasoil, jet fuel, kerosene, and naphtha.
Natural Gas Prices Show Mixed Trends Across Markets
Natural gas price trends varied across regions:
*In the U.S., Henry Hub prices fell 31.8% since January 2025, largely due to oversupply and milder weather conditions.
*In contrast, the Japan Korea Marker (JKM)—Asia’s spot LNG benchmark—rose 6.7% year-on-year to USD 11.9/mmbtu, driven by stronger regional demand.
Q4 FY25 Earnings: Sequential Gains Despite Annual Dip
During the fourth quarter of FY25, the sector experienced a modest year-on-year decline in earnings, but a sequential improvement across segments:
*Gas and City Gas Distribution (CGD) companies generally posted revenues above expectations.
While EBITDA per scm declined year-on-year for CGDs, the segment showed a rebound on a sequential basis, driven by strategic price hikes and a more favorable gas price mix.
Conclusion
Despite global headwinds, India’s oil and gas sector is demonstrating resilience through strong refining performance, selective pricing power, and a diversified gas strategy. As reported by news.abplive.com, backed by strong fundamentals and operational tailwinds, the industry is well-positioned to deliver healthy financial growth through FY27.
