Oil & gas Q2 results preview: Will RIL and OMCs deliver a positive surprise amid steady crude oil prices?

Oil & gas Q2 results preview: Led by a strong performance from the oil marketing companies (OMCs) and India's biggest listed company, Reliance Industries (RIL), analysts expect a robust year-on-year (YoY) growth for the oil and gas sector even though the performance may moderate on a sequential basis.

Commenting on the overall outlook for oil & gas companies under its coverage, ICICI Securities expects profit after tax (PAT) to improve 14% YoY but dip 9% quarter-on-quarter (QoQ). Meanwhile, earnings before interest, tax, depreciation and amortisation (EBITDA) could rise by 20% YoY but decline 7% QoQ.

At the same time, Nuvama Research forecasts the oil & gas sector's Q2FY26E aggregate EBITDA to jump 26% YoY, led by refining strength, partially offset by softness in other segments.

ICICI Securities expects a YoY increase in the operational performance based on the likelihood of a strong performance by OMCs and Reliance.

Reliance Q2 Preview

Overall, the brokerage sees RIL's YoY performance to remain strong, but QoQ performance may be flattish, with some growth in Jio and retail, offset by muted upstream and flattish OTC performance. It has pegged the consolidated EBITDA growth of 13% (+2% QoQ) and PAT growth of 8% YoY (-1% QoQ).

Nuvama said that RIL's O2C EBITDA is likely to jump 20% YoY on 13% YoY growth in the benchmark Singapore GRM led by diesel crack spreads (+52% YoY). However, O&G EBITDA could dip 7% YoY on a 7% fall in production, it added.

OMCs: Strong YoY performance

As for OMCs, namely BPCL, IOCL and HPCL, ICICI Securities expects stronger performance in Q2FY26 compared to last year, driven by better refining margins (GRMs), lower inventory losses, and reduced LPG under-recoveries. Singapore GRMs improved slightly by USD 0.3 per barrel year-on-year, though they were down USD 1.6 per barrel from the previous quarter.

Retail fuel margins declined, with petrol margins down by ₹0.2 per litre (now at ₹8.5/litre) and diesel margins down by ₹1.6 per litre (now at ₹4.1/litre) compared to last year. LPG under-recoveries are expected to drop to ₹20–30 billion in Q2, helped by a price hike of ₹50 per cylinder and falling propane prices, it added. This is a big improvement compared to ₹79 billion in under-recoveries in both Q2FY25 and Q1FY26.

As a result, BPCL's EBITDA may rise by 23% YoY, HPCL’s by 390%, and IOCL is expected to post a profit of ₹42.7 billion, compared to a loss of ₹10.3 billion last year, brokerage opined.

However, a decline on a QoQ basis cannot be overruled, with JM Financial estimating a 16-37% dip on sharp moderation in auto fuel GMM.

Upstream companies

Brent crude (net of windfall tax) realisations are set to improve for ONGC and Oil India, opined brokerages.

JM Financial said that Oil India and ONGC are likely to witness higher crude and gas realisation and crude sales volume QoQ. Hence, Oil India’s EBITDA is likely to be up 2.3% QoQ while ONGC’s EBITDA is expected to decline 2.2% QoQ on higher opex in 2QFY26, it added.

Meanwhile, ICICI Securities noted that EBITDA for both upstream companies together may decline by 2% YoY (flattish QoQ) and PAT could decline by 22% YoY (+22% QoQ due to higher dividend income).

City Gas Distributors

CGD (City Gas Distribution) companies are expected to report mixed earnings for Q2FY26.

ICICI Securities said that IGL and MGL may post strong volume growth of 7% and 9% YoY, respectively, while Gujarat Gas could see a modest 2% increase. EBITDA is likely to rise 5% YoY for IGL, remain flat for MGL, and decline 16% YoY for Gujarat Gas.

As for GAIL, Nuvama sees EBITDA declining to 17% YoY on a 29% YoY fall-off in marketing EBITDA due to softer margins.

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