9 Oil & Gas Stock Ideas From ICICI Securities

ICICI Securities has a positive note on nine stocks from the oil and gas sector. In its sectoral coverage report, the stock-broking firm has mentioned that despite multiple headwinds at play, these companies are showing signs of improvement in margins which will be helpful in the future.

As per the report, FY23 saw multiple headwinds impact the oil and gas sector owing to the Russia-Ukraine conflict and the resultant spike in input costs for midstream/downstream players. Additionally, the imposition of windfall taxes limited the gains from pricing strength for refiners and upstream players as well.

ICICI Securities cites reasons for its upbeat view on oil and gas stocks. It expects stronger prospects over FY24/25E, led by:

1) Relatively moderate crude and LNG prices

2) Higher domestic supplies of gas and to a limited extent crude

3) Completion of expanded gas transportation infrastructure

4) Pricing and gas tariff regulation changes which provide visibility on costs/margins

Observation & View

Softer GRMs in Q1FY24 YTD and the potential for promoter (GoI) led reduction in retail fuels (petrol, diesel) create some downside, but on balance, we see a material earnings growth environment across our oil & gas coverage universe, with only a few exceptions.

The brokerage firm has given an estimate of a few of the firms. For FY24E EPS growth for upstream (ONGC+OIL), downstream (OMCs), utilities (GAIL+GUJS+PLNG), CGDs (IGL/MGL/GUJGA) and RIL are expected to be 9/622/30/14/25%, respectively.

"We remain positive across the space with GAIL, IGL, MGL, GGL being preferred names in gas space, OIL, ONGC in upstream and BPCL, IOCL, HPCL for OMCs," it added.

Disclaimer

The stocks have been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the author or the brokerage house will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.