STOCK MARKET BSE NSE

Muted second quarter results likely for oil and gas majors

According to estimates, OMCs are set to see higher marketing margins by as much as 12.9 per cent, 7.1 per cent and 8.2 per cent for IOCL, BPCL and HPCL respectively.

Published: 05th October 2019 01:36 AM  |   Last Updated: 05th October 2019 10:55 AM   |  A+A-

gas, natural gas, oil, fuel, Hydrocarbons, energy

For representational purposes

By Express News Service

NEW DELHI:  While the sharp reduction in corporate taxes may boost the Indian oil and gas sector’s earnings sharply during the second quarter, analysts note that the three-month period between July and September is likely to be a muted one in terms of financial performance. According to Centrum Wealth analysts Probal Sen and Akshay Mane, without adjusting estimates to factor in corporate tax cut in the absence of clarity on how companies account for it during the quarter, the oil and gas sector is likely to see year-on-year earnings growth impacted due to “sharply higher inventory gains and much higher upstream earnings” during the second quarter of last year.

“That being said, we see a stronger quarter-on-quarter performance from oil marketing companies (OMCs), thanks to an improved downstream margin environment and better marketing margins,” the analysts said. According to estimates, OMCs are set to see higher marketing margins by as much as 12.9 per cent, 7.1 per cent and 8.2 per cent for IOCL, BPCL and HPCL respectively.

City gas distribution firms like Indraprastha Gas, Mahanagar Gas and Green Gas are also expected to deliver a strong quarter in terms of year-on-year growth with an estimated 58 per cent rise in profit after tax “driven by soft spot LNG prices and strong volume growth”. But, upstream companies like ONGC and Oil India Ltd are likely to fare much worse than their downstream counterparts.

ALSO READ | Oil price worries ease as Brent crude rates drop sharply

“Lower Brent Crude prices in Q2 (down 17.6 per cent year-on-year), coupled with weak oil production and lower realisations drive a weak performance for ONGC and OIL. Combined, EBITDA for the two companies estimated to decline by 14.5 per cent year-on-year,” the analysts said. However, some weakness may be offset by a marginal improvement in gas production for both oil and gas producers.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp