Upstream oil producers such as ONGC and Oil India may benefit from stronger realisations, a JM Financial note said, even as oil marketing companies (OMC), paints, tyres, aviation and chemicals face margin pressure from higher input cost.
Crude oil benchmark Brent, which started the 2026 around the levels of $63-$65 per barrel and is hovering around the $100 a barrel mark, implying an over 35% surge.
The continued closure of Strait of Hormuz poses a daunting risk to the global energy supply, while giving a fillip to the stocks of oil exploring companies like ONGC and Oil India.
Strait of Hormuz, a 21-mile-wide waterway which remains a critical passage for global supply. Approximately 20 million barrels per day pass through the Strait — roughly 31% of all seaborne crude oil on earth.
SoH’s continued closure (20 mbpd) risks crude at $110–150/bbl in 4–8 weeks, a Nuvama note said, while conceding that the release of strategic reserves could bring near-term relief.
Kranthi Bathini, Director-Equity Strategy at WealthMills Securities said both ONGC and Oil India remain a medium term play, recommending a buy on them. Calling them as quality stocks which also offer high dividend yields, Bathini said that investors could take advantage of the current uncertainty while adhering to strict stop loss if the view is positional or short term.”The uncertainty around war makes it very volatile as we have seen the prices shoot-up to $120 mark and then falling below $100 a barrel. The current prices are only because of the war and are not sustainable over a long term and if the war ends, they could fall sharply” he warns.
Share price performance
ONGC has outperformed the sector with 19% one-year returns versus 15% by Nifty Oil & Gas. The stock is currently trading above its 50-day and 200-day simple moving averages (SMAs) of Rs 261 and Rs 247, respectively, according to Trendlyne data. Its dividend yield is 5% and it has given 59 dividends since January 2003.
Meanwhile, Oil India’s one-year returns stood at around 30% as on March 12, Thursday. The stock is currently trading above its 50-day and 200-day simple moving averages (SMAs) of Rs 464 and Rs 434, respectively, Trendlyne data suggests. Its dividend yield is 2.5% and the company has given 41 dividends since February 2010.
Just three stocks in the Nifty Oil & Gas index have managed to deliver positive returns so far this year viz. Adani Total Gas (ATGL, 3%), Petronet LNG (3%) and Aegis Logistics (4%).
The rest have seen their share prices decline. Indian Oil corporation (IOC), Castrol India, Mahanagar Gas, Gujarat State Petronet, Gail (India), Reliance Industries (RIL), Bharat Petroleum Corporation Limited (BPCL) and Indraprastha Gas and Hindustan Petroleum Corporation have declined between 3% and 23%.
Q3 earnings
ONGC reported a 16% year-on-year growth in its December quarter consolidated net profit at Rs 10,016 crore versus a profit after tax (PAT) of Rs 8,622 crore in the year ago period. The total revenue in the reported quarter stood at Rs 1.71 lakh cr which was a growth of 1.3% YoY.
Oil India reported an 11% YoY decline in Q3 PAT at Rs 1,195 crore while the total revenue witnessed a 4% growth in Q3FY26 to Rs 8,987 versus Rs 8,639 crore in the same period in FY25.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)