India Oil and Gas: Lessons from 1Q; and trends to follow

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

17 August 2026

India Oil and Gas

Lessons from 1Q; and trends to follow

What did we learn from the 1Q numbers? 1) Most companies delivered strong gas

trading profits. Even though oil is down QoQ, this strength should continue in 2Q,

supporting stocks such as GAIL/PLNG. 2) PSU refiners largely avoided the feared

distress through price hikes / tax cuts, gains at the end of the quarter, and limited

inventory revaluations. 1Q implies strong earnings for 2Q, but these stocks remain

strong regional plays for falling oil prices in the medium term (prefer BPCL/

IOCL). 3) Gas user companies (City gas) were under pressure, with MAHGL

taking sufficient price increases, but IGL not (continue to prefer MAHGL over

IGL). 4) Refining margin benchmarks are strong and have increased further

recently. A broad range of petrochemical spreads have also expanded. In theory,

this should be good for Reliance’s O2C business, but the company has had

relatively muted net upside for the segment in recent quarters. The Indian energy

space has more linkages to oil and less to refining / petchem margins overall.

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(91-22) 6157-3600

Atishy Rathi, CFA

(9122) 6157-3589

J.P. Morgan India Private Limited, J.P. Morgan

Tower, Santacruz(E), Mumbai - 400098, SEBI

Registration: INH000001873, (91-22) 6157-3000.

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City gas companies struggled with higher input costs: MAHGL, IGL and

GUJENERG each reported sharply higher input gas costs, higher than initially

expected (Figure 21- Figure 24). Companies tried to raise prices, but with

differing outcomes: a) Gujarat Energy was able to raise prices enough and grow

volumes (Morbi up sharply), b) MAHGL took sufficient price increases as

well, but saw a contraction in Industrial volumes and c) IGL’s price increases

were insufficient to defend margins; and PNG volumes were down 4% QoQ.

Rather than company strategy, this might be indicative of the nature of

industrial demand in each geography. Industries in Morbi – lacking propane

supplies – were willing to take higher cost natural gas. Those around Delhi

were likely the most price sensitive.

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