The oil and gas sector had a busy 2024 year with crude oil prices on an intense roller coaster ride due to heightened geopolitical tensions, rate cut cycle and major elections like the continued reign of PM Modi led government in India and the return of Donald Trump to the White House. Amidst the external and internal factors, 2024 also saw many major oil and gas companies in India reward investors with bonus issues and dividends. Here's the list of the top 5 oil and gas companies in India and their performance market:
1. Reliance Industries (RIL):
India's richest man, Mukesh Ambani-backed Reliance Industries (RIL) is not only the most valued oil and gas company but also the largest in the country in terms of market share. As of December 22, 2024, Reliance's market cap of Rs 16.32 lakh crore on BSE. Currently, the stock is at Rs 1,206 on BSE, and its year-to-date performance is down by 6.9%. In a year, the stock dipped by 6%.
In 2024 so far, Reliance has delivered one bonus issue in the ratio of 1:1 and final dividend of Rs 10 per share for FY24.
Recommendations: As per Trendlyne data, the consensus recommendation from 37 analysts for Reliance Industries Ltd is BUY. The average 1-year target price is at Rs 1602.32 apiece, hinting at a potential 33% upside.
Reliance is India's largest private sector company, with a consolidated revenue of Rs 10,00,122 crore, cash profit of INR 1,41,969 crore ($ 17.0 billion) and net profit of Rs 79,020 crore ($ 9.5 billion) for the year ended March 31, 2024. Reliance's activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, advanced materials and composites, renewables (solar and hydrogen), retail and digital services.
2. Oil and Natural Gas Corporation (ONGC):
ONGC is a Maharatna PSU, and the largest government-backed oil and gas explorer and producer. However, it is the second largest oil and gas compared to Reliance.
At the second spot, ONGC currently has a market share of over Rs 2.98 lakh crore. However, compared to Reliance, ONGC is cheaper and has performed better in 2024. YTD, the stock price has surged nearly 16%. It trades below the Rs 240 level.
In 2024, ONGC has paid hefty dividends. The company paid an interim dividend of Rs 4 per share and its ex-date was on February 16, followed by a final dividend of Rs 2.50 per share with an ex-date on August 23 for FY24. Further, ONGC has delivered its first interim dividend for FY25 at the rate of Rs 6 per share, and its ex-date was on November 19, 2024.
Recommendation: As per Trendlyne data, the consensus recommendation from 30 analysts for Oil And Natural Gas Corporation Ltd. is BUY. The average 1-year target price of 312.67 apiece, hinting at a potential 32% upside.
Maharatna ONGC is the largest crude oil and natural gas Company in India, contributing around 71% to Indian domestic production. Crude oil is the raw material used by downstream companies like IOC, BPCL, HPCL and MRPL (The last two are subsidiaries of ONGC) to produce petroleum products like Petrol, Diesel, Kerosene, Naphtha, and Cooking Gas LPG.
3. Indian Oil Corporation (IOCL):
Indian Oil is the largest oil marketing company (OMC) in India. However, with a market cap of Rs 1,93,814 crore. Indian Oil is the third largest oil and gas company in India. Notably, Indian Oil's performance has been in single-digit by 5.3% YTD. Its share price is currently below Rs 140.
Indian Oil has delivered only a dividend of Rs 7 per share which was final for FY24, and its ex-date was on July 12, 2024. For FY24, the interim dividend was Rs 5 per share.
Recommendation: As per Trendlyne data, the consensus recommendation from 32 analysts for Indian Oil Corporation Ltd. is HOLD. The average 1-year target price is Rs 166.68, signalling nearly 22% potential upside.
IndianOil is a diversified, integrated energy major with business interests encompassing the entire hydrocarbon value chain - from refining, pipeline transportation & marketing to exploration & production of crude oil & gas, petrochemicals, natural gas and alternative energy sources. IndianOil is relentlessly working on green energy pathways to catalyse India's green transition, including emission mitigation, energy efficiency, fuel replacement and renewable energy projects.
4. Bharat Petroleum Corporation (BPCL):
Refineries and marketing company, BPCL is the fourth largest oil and gas company, and second largest oil marketing company in India with market cap of Rs 1,25,360.07 crore as of December 22, 2024. Currently, the stock price is below Rs 290. Unlike its peer Indian Oil, BPCL has witnessed a bearish trend broadly year-to-date with the decline of a little over 4%.
In 2024, BPCL delivered one bonus issue of a 1:1 ratio in June and distributed a final dividend of Rs 10.50 per share in August 2024.
Recommendations: As per Trendlyne data, the consensus recommendation from 33 analysts for Bharat Petroleum Corporation Ltd. is HOLD. The average 1-year target price is at Rs 348.06 apiece, which signals over 30% potential upside.
5. Hindustan Petroleum Corporation (HPCL):
HPCL, is the fifth-largest oil and gas company and third-largest OMC in the country. As of December 22, HDFC Bank shares are currently below Rs 400, with a market cap of Rs 85,102.26 crore. Despite not being part of Rs 1 lakh crore m-cap club, HPCL shares have outperformed its rivals like Indian Oil and BPCL. YTD, and HPCL shares have soared by 50%.
In 2024, HPCL shares delivered an interim dividend of Rs 15 per share, and a final dividend of Rs 11 per share for FY24. Also, the company has paid a bonus issue ratio of 1:2.
Recommendations: As per Trendlyne, the consensus recommendation from 32 analysts for Hindustan Petroleum Corporation Ltd. is HOLD. However, the average 1-year target price is at Rs 396.72 apiece, which signals a nearly 1% potential drop ahead.
Also, a Maharatna PSU, HPCL is a subsidiary of ONGC.
Crude Oil Prices:
Rahul Kalantri, VP Commodities, Mehta Equities said, crude oil prices showed very high volatility and WTI prices recovered from their lows after the U.S. crude oil inventories declined by 0.9 million barrels last week. The distillate stocks also fell but gasoline inventories surged once again. The U.S. FED cuts interest rates by 25 basis points as per market expectations and also supported oil prices. However, record strength in the dollar index after FOMC meeting outcomes and the U.S. FED hawkish guidance for 2025 rate cuts could restrict gains of crude oil. The U.S. FED guidance for 2025 rate cuts is reduced to 50 basis points from the November meeting of 100 basis points and could impact global oil demand.
According to Trading Economics, the recovery came as the US dollar softened from two-year highs, with data indicating cooling inflation just two days after the Federal Reserve's interest rate cut. China's energy outlook added to market uncertainty, as Sinopec predicted crude imports could peak by 2025 and oil consumption by 2027. These forecasts contributed to the weekly losses in global oil benchmarks. OPEC+ downgraded its 2024 demand growth outlook for the fifth consecutive time, highlighting the need for supply discipline. Geopolitical tensions increased as the G7 explored stricter measures on Russian oil price caps.Additionally, President-elect Trump raised the possibility of tariffs on the EU if it doesn't address trade imbalances, particularly in U.S. oil and gas.
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