Morgan Staley believes that India's gas stocks offer some of the best growth opportunities as the country's gas pipeline network has doubled, which will help gas producers and city gas players in volume growth. Expecting healthy growth, the brokerage has raised the target price on ONGC, GAIL, and Oil India and picked GAIL, OIL, and ONGC along with Gujarat Gas as top choices.

Stocks Rating New Target Old Target
ONGC Overweight Rs 254 Rs 216
GAIL Overweight Rs 195 Rs 151
Petronet LNG Equalweight Rs 219 Rs 235
Oil India Overweight Rs 487 Rs 329
GSPL Underweight Rs 262 Rs 265
Gujarat Gas Overweight Rs 579 Rs 505
Indraprastha Gas Equalweight Rs 413 Rs 432

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Meanwhile, Jefferies sees a range-bound profitability for the oil-to-chemicals (O2C) segment of Reliance Industries (RIL) in FY25 and forecasts 13 per cent consolidated growth in earnings before tax, interest, depreciation, and amortisation (EBITDA), driven by a hike in Jio tariff. The brokerage has downgraded GAIL due to its rich valuation and instead prefers MGL.

The brokerage has raised its targets on Gujarat Gas, Petronet LNG, Indraprastha Gas, Mahanagar Gas, HPCL, IOCL, and BPCL

Stocks Rating New Target Old Target
Petronet LNG Underperform Rs 195 Rs 180
Gujarat Gas Underperform Rs 385 Rs 370
Indraprastha Gas Hold Rs 430 Rs 420
Mahanagar Gas Buy Rs 1,450 Rs 1,350
HPCL Underperform Rs 330 Rs 225
BPCL Underperform Rs 405 Rs 300
IOCL Hold Rs 130 Rs 90

Citi has also increased its target price on Gujarat Gas, Indraprastha Gas, and Mahanagar Gas.

Stocks New Rating New Target Old Target
Gujarat Gas Sell Rs 425 Rs 390
Indraprastha Gas Buy Rs 510 Rs 470
Mahanagar Gas Buy Rs 1,390 Rs 1,250

How are oil and gas companies expected to fare in Q3?

According to domestic brokerage Anand Rathi, after a record H1FY24, third quarter trends suggest another relatively convincing performance by oil marketing companies (OMCs), despite being hit by inventory losses and lower gross refining margins (GRMs).

Further, strong non-OPEC supply of 1.6 million b/d for CY24 is likely to be ahead of demand of 0.9 million, thereby keeping oil prices subdued and supporting strong performances by OMCs.

The brokerage has raised its FY25 and FY26 estimates on the back of geopolitical tension, and the subsequent ban on European Union (EU) imports of Russian crude has led to supplies being diverted to China and India.

"We expect the continued availability of discounted Russian crude to support GRMs and increase our FY25e/FY26e refining assumptions by $1.3-2.7/bbl and earnings by 6-145 per cent," the report read.

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