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India’s Oil & Gas Sector Poised For Steady Growth Through FY26-27 Despite Market Volatility: Research
India’s oil and gas sector is projected to maintain robust growth through FY26 and FY27, despite recent market turbulence, according to a research note by Systematix Institutional Equities.
The brokerage expects that India’s oil and gas companies are likely to post average sales growth of 6 per cent in FY26 and 7.8 per cent in FY27, with ebitda rising by 12.9 per cent and 9 per cent, and Pat increasing by 13.3 per cent and 10.1 per cent year-on-year, respectively. Top investment picks include Reliance Industries (RIL), GAIL India (GAIL), Mahanagar Gas (MGL) and Gulf Oil Lubricants India (GOLI).
The oil market witnessed high volatility in May 2025. Brent crude prices dropped 22.9 per cent year-on-year and 3.8 per cent month-on-month, driven by higher Opec output from Saudi Arabia and the UAE. This decline in prices also led to a fall in US rig counts, indicating caution in upstream investment.
However, refining margins rebounded sharply, with the benchmark Gross Refining Margin (GRM) increasing 85 per cent month-on-month and 121 per cent year-on-year to USD 6.4 per barrel. The surge was attributed to lower crude costs and stronger cracks in gasoline, gasoil, jet fuel, kerosene, and naphtha.
Natural gas markets showed divergent trends. While US Henry Hub prices dropped 31.8 per cent since January 2025 due to oversupply and mild weather, Asian spot LNG (Japan Korea Marker) rose 6.7 per cent year-on-year to USD 11.9/mmbtu, buoyed by regional demand.
In the final quarter of FY25, the oil and gas sector saw flat year-on-year earnings but sequential improvement, especially among gas and City Gas Distribution (CGD) companies. While EBITDA per standard cubic metre (scm) declined on a yearly basis, it recovered sequentially, supported by price increases and favourable gas sourcing.
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