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1QFY25 preview: Weak for most names

We expect 1QFY25 to be weak for most oil & gas names, except GAIL and PLNG. For RIL, O2C segment weakness would offset modest growth in R-Jio/retail for 8% qoq EBITDA decline. For OMCs, EBITDA could decline ~35-43% on weaker GRM and also qoq lower auto-fuel marketing margins. GAIL and PLNG should benefit from higher gas consumption, while sharp tariff cut would offset higher volumes for GSPL. Rising APM shortfall and full impact of price cuts would impact gross margins for CGDs, while volume growth remains tepid.

RIL: Sequentially weaker on lower GRM and muted growth in R-Jio/retail

We expect consolidated EBITDA to decline ~8% qoq (+3% yoy), due to weaker O2C performance. We expect standalone EBITDA to decline ~15% qoq on weaker GRM. For R-Jio, we expect ~2% qoq EBITDA growth, driven by ~9.4 mn overall net adds (versus ~11 mn qoq) and stable ARPU at Rs182/month. In retail, we expect modest ~2% qoq EBITDA growth on increased store footprint and operating leverage. We assume ~4% qoq moderation in E&P EBITDA.

Upstream: Higher windfall cess to offset the benefits of higher Brent prices

With both oil and gas prices capped, we expect the benefits of ~2% qoq higher Brent prices to be offset by an increase in windfall tax. ONGC’s EBITDA would likely decline ~6% qoq on lower net oil realization and also lower oil production.

OMCs: Sharp qoq decline likely on weaker GRM and lower auto fuel margins

With sharp qoq decline in key product cracks (SG complex: US$3.5/bbl, US$7.3/bbl qoq) and lower Russian discounts, we expect reported GRM to further moderate for OMCs. Further, with the full impact of Rs2/liter price cut in March and higher Brent prices, marketing margins on auto fuels were also weaker qoq. We expect ~35-43% qoq decline in EBITDA for the three OMCs.

Gas: Likely good for GAIL, PLNG; not so good for CGDs and GSPL

4 GAIL: We expect 6% qoq higher EBITDA on higher transmission volume and higher marketing earnings. We expect qoq EBIT improvement in transmission and marketing, while Petchem and LPG would be impacted by shutdowns in 1Q.

4 PLNG: We expect adjusted EBITDA to rise 20% qoq (+17% yoy) on 7% higher volume (106% Dahej utilization versus 98% qoq), and 5% tariff increase at Kochi.

4 GSPL: We expect sharp ~19% qoq EBITDA decline as part impact of ~47% tariff cut would be offset by higher transmission volume (37 mmscmd, +11% qoq).

4 CGDs: We expect flat to marginal 1% qoq volume growth for IGL/MGL. For MGL, due to low base (2.3% yoy decline in 1QFY24), CNG volume will look optically strong. We expect MGL’s unit EBITDA to decline further to Rs10.5/scm (from Rs11.5/scm qoq). Gross margin should decline sequentially for IGL as well. However, with normalization in opex (was elevated in 4QFY24), unit EBITDA would likely be flat qoq at Rs6.6/scm (versus Rs8.6/scm yoy).

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