Nomura India in its Q1 oil & gas sector preview said June would be a weak quarter for oil marketing companies namely IOC, HPCL and BPCL due to a sharp decline in refining and marketing margins. For upstream players, it sees rise in volumes for Oil India but fall for ONGC Ltd. The foreign brokerage is anticipating a strong quarter for GAIL and Petronet LNG but believes margins for city gas distributors (CGDs) will be impacted. For Reliance Industries Ltd, it sees a sustained delivery across consumer-facing businesses, offset by weak refining business.
HPCL, BPCL & IOC Nomura India said OMCs may report a weak set of results in 1QFY25, reflecting the impact of a sharp sequential decline in refining margins; a 20 per cent QoQ decline in marketing margins, albeit remaining above-normative levels of Rs 3.9 per liter; and modest inventory losses on account of $0.3 per barrel decline in end-period crude prices.
It expects Ebitda for BPCL to plunge 42 per cent QoQ to Rs 5,360 crore against Rs 9,210 crore in 4Q. It sees ) IOCL's Ebitda to dived 29 per cent QoQ to Rs 7,430 crore against Rs 10440 crore in Q4 and HPCL's to fall 28 per cent QoQ to Rs 3440 crore vs Rs 4,800 crore in 4Q.
"We expect refining margins for OMCs to decline sharply on a sequential basis in 1QFY25F underpinned by the significant decline in spreads for transportation fuels—diesel (down $7.2 per barrel QoQ), gasoline (down $4.4 per barrel QoQ) and jet fuel/kerosene (down $7.2 a barrel QoQ), which will be further modestly impacted by inventory losses following the $0.3 per barrel decline in end-period crude oil prices," it said.
Nomura sees refining margin of $6.3 a barrel for BPCL, $5.6 per barrel for IOC; and $5.3 per barrel for HPCL.
Reliance Industries Q1 results preview Nomura India said RIL’s 1QFY25 consolidated Ebitda may fall 7 per cent sequentially to Rs 39,400 crore, as sustained growth across consumer facing businesses of Jio and Retail will be offset by a sharp decline for O2C.
"We expect RIL to continue to deliver healthy growth across its consumer-facing businesses. We estimate Jio’s Ebitda of Rs 14,200 crore to grow 4 per cent QoQ in 1QFY25, underpinned by strong EoP subscriber additions of 95 lakh and a modest increase in ARPU to Rs 182.70 per month (Rs 181.7 per month in the previous quarter). We estimate RR’s core retail revenue of Rs 52,100 crore, to grow 15 per cent YoY (4 per cent QoQ), and Ebitda of Rs 5,700 crore, up rise 17 per cent YoY, with margins of 7.2 per cent.
ONGC, Oil India Q1 result previews Nomura expects ONGC’s Ebitda to decline 4 per cent sequentially to Rs 16,700 crore in1QFY25. It sees overall crude oil sales volumes declining 1 per cent QoQ/YoY to 4.7 million tonness, in- line with current production trends, and overall gas sales volumes to decline 1 per cent QoQ/7 per cent YoY to 3.8bcm.
Net crude oil realization (post-SAED) is likely to rise 1 per cent QoQ to $74.5per barrel from $73.8 per barrel in the previous quarter; domestic gas prices
"We estimate OIL’s ), Ebitda to increase 8 per cent QoQ to Rs 25.2bn, underpinned by—(1) 2 per cent QoQ increase in oil sales volumes to 0.9mn tons and 1 per cent increase in gas sales volumes to 0.7bcm, in line with recent production trends, and (2) a sequential decline in operating costs on a high base. We factor in net oil realizations to decline to USD74.5/bbl from $78.8/bbl in the previous quarter, and gas realizations of $6.5/bbl," it said.
GAIL, Petronet LNG, MGL, IGL, GSPL, Gujarat Gas Q1 result previews
On GAIL, Nomura sees GAIL’s Q1 Ebitda at Rs 3,630 crore, up 7 per cent QoQ from Rs 3,430 crore in the previous quarter underpinned by the growth across segments, excluding LPG & LHC production.
"We estimate gas transmission EBIT of Rs 12.1bn, to increase 4 per cent QoQ, reflecting a 3 per cent QoQ/9 per cent YoY increase in volumes to 127mmscmd and broadly steady tariffs at Rs 2.4/scm. We factor in LPG & LHC production EBIT of Rs 290 crore to decline 12 per cent QoQ underpinned by a 3 per cent QoQ decline in realization to Rs 53/kg, while sales volumes remain broadly steady with sales at 260k tons," it said.
Nomuraanticipates net income of Rs 1,900 crore for GAIL, a decline of 11 per cent QoQ as higher Ebitda is offset by lower other income.
Petronet LNG's Q1 Ebitda is seen at Rs 1,220 crore, up 14 per cent QoQ driven by a 5 per cent increase in volumes at the Dahej terminal to 229tbtu and higher margins on spot volumes. Nomura builds in utilisations for the Dahej terminal to rise to 103 per cent against 98 per cent in the previous quarter and utilisation for Kochi terminal to remain steady at 24 per cent.
In the case of IGL, Ebitda is seen at Rs 470 crore, down 9 per cent QoQ, as healthy volume growth will be offset by a decline in gross margins underpinned by lower realizations of Rs 1.7 per kg for CNG and higher input costs on lower APM allocation.
"We anticipate sales volumes of 8.8mmscmd to grow at 7 per cent YoY, which will remain steady QoQ, driven by a 6 per cent YoY CNG volume growth and 14 per cent YoY growth for I&C on a low base. We estimate gross margins of Rs 12.1/scm to decline 8 per cent QoQ from Rs 13.1/scm in the previous quarter, which will lead to unit Ebitda of Rs 6.1/scm to decline 8 per cent QoQ from Rs 6.6/scm in the previous quarter," it said," it said.
For MGL, Nomura estimated Ebitda of Rs 370 crore, down 5 per cent QoQ as healthy volume delivery is offset by a decline in gross margins on account of lower realizations of Rs 1.8/kg on an average for CNG and higher input costs on lower APM allocation.
"We anticipate sales volumes of 3.8mmscmd to rise 11 per cent YoY, which will remain steady QoQ driven by a 9 per cent YoY growth for CNG and 28 per cent growth for I&C consumers. We estimate gross margins of Rs 16.5/scm, a decline of 8 per cent QoQ from Rs 17.9/scm in the previous quarter, which will lead to unit Ebitda of Rs 10.8/scm, a decline of 6 per cent QoQ from Rs 11.5/scm in the previous quarter," Nomura Indai said.
For Gujarat Gas, it estimates Ebitda of Rs 560 crore, down5 per cent QoQ as a healthy QoQ volume growth will be offset by a decline in margins for GGL. We estimate overall volumes of 10.8mmscmd to increase 11 per cent QoQ driven by strong growth for industrial and CNG volumes.
Healthy volume recovery in the quarter could be offset by lower margins following GGL’s price cut in the Morbi region by Rs 2.5/scm and higher blended input costs.
On GSPL, Nomura India said a sharp 28 per cent decline in GSPL’s Ebitda to Rs 270 crore in 1QFY25F, reflecting the impact of the cut in transmission tariffs from 1 May, which will be partly offset by an uptick in transmission volumes on higher offtake from GGL and power sector.
"We factor in transmission tariffs to decline 27 per cent QoQ to Rs 1.1/scm while overall volumes will increase 8 per cent QoQ to 36mmscmd. We expect net income of Rs 180 crore, a decline of 31 per cent QoQ.