Best Energy Stocks For Jan 2025: Chennai Petroleum, Oil India, HPCL and more- Based on 5Y CAGR

The oil and gas or Energy sector is one of the eight key sectors in India, playing a crucial role in shaping decisions across other vital areas of the economy. India’s economic growth is closely tied to its energy needs, and as a result, the demand for oil and gas is expected to rise, making the sector highly attractive for investment.

As of 2023, India maintained its position as the third-largest oil consumer globally. The government has implemented various policies to meet the growing demand, including permitting 100% foreign direct investment (FDI) in several areas of the sector, such as natural gas, petroleum products, and refineries. In this blog, let’s explore the best energy stocks for Jan 2025 based on 5Y CAGR

Overview of Energy Sector in India

India’s primary energy demand is projected to nearly double to 1,123 million tonnes of oil equivalent, driven by the expected rise in its GDP to US$ 8.6 trillion by 2040. Over the past decade, India’s refining capacity has grown from 215.1 million Metric Tons Per Annum (MMTPA) to 256.8 MMTPA, with a further increase forecasted to reach 309.5 MMTPA by 2028.

India is anticipated to become one of the largest contributors to global non-OECD petroleum consumption growth. Petroleum product consumption has surged from 158.4 million metric tons (MMT) in the 2013-14 fiscal year to 234.3 MMT in 2023-24.

In FY23, India’s petroleum product consumption averaged nearly 4.44 million barrels per day (BPD), up from 4.05 million BPD in FY22. Meanwhile, the country’s crude oil production was recorded at 2.69 million BPD during April-October 2023.

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Best Energy Stock Based on 5Y CAGR

Note: The stocks have been sorted based on 5Y CAGR and as of January 01, 2025, and market capitalisation of over ₹5,000 Crore

Overview of 5 Best Energy Stocks

1. Chennai Petroleum Corporation Ltd

Chennai Petroleum Corporation Limited is engaged in refining crude oil to produce & supply various petroleum products and manufacture and sale of lubricating oil additives. During Q2 FY25, crude throughput stood at 2.098 MMT, registering a fall of 31.19% from 3.049 MMT reported in the same period last year. During 1H FY25, the company reported a net loss of ₹286.89 crore in H1 FY25 as against net profit of ₹1,738.88 crore in H1 FY24. Net sales declined 6.7% YoY to ₹29,181.52 crore in the half year ended 30 September 2024.

Key Metrics:

• Return on Equity (ROE): 36.5%
• Return on Capital Employed (ROCE): 35.4%

2. Oil India Ltd

Oil India Ltd is involved in exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG. During Q2 FY25, Oil India continued to improve its crude oil production, which is higher by 4.79% to 0.875 MMT vis-a-vis 0.835 MMT in Q1 FY24. Crude oil production has increased by 5.5% in the half year ended 30 September 2024 at 1.746 MMT vis-a-vis 1.655 MMT in the half year ended 30 September 2023.

Key Metrics:

• ROE: 18%
• ROCE: 17.7%

3. Mangalore Refinery and Petrochemicals Ltd 

Mangalore Refinery and Petrochemicals Ltd is mainly involved in the manufacturing, purchase, and sale of fertilisers. MRPL reported a net loss of ₹ 696.94 crores for the period ending September 30, 2024, compared to a net profit of ₹ 73.22 crores for the period ending June 30, 2024. In contrast, MRPL posted a net profit of ₹ 1,051.68 crores for the same period in 2023.

Key Metrics:

• ROE: 18.2%
• ROCE: 16.9%

4. Hindustan Petroleum Corporation Ltd

Hindustan Petroleum Corporation Ltd is primarily involved in refining crude oil and marketing petroleum products, production of hydrocarbons as well as providing services for management of E&P Blocks. For FY25, the company is planning to incur a CAPEX of ₹ 12,000 crore – ₹ 13,000 crore. Out of which, the company has already spent CAPEX of ₹6,588 crore.

 Key Metrics:

• ROE: 40.4%
• ROCE: 21.3%

5. Oil & Natural Gas Corpn Ltd (ONGC) 

ONGC is the largest crude oil and natural gas Company in India, contributing around 71% to Indian domestic production. During Q2 FY25, ONGC’s sales revenue witnessed a drop of 3.5% due to lower crude prices. However, sales of 1HFY25 rose 0.4% due to the increased sales revenue from value-added product sales.

Key Metrics:

• ROE: 16.3%
• ROCE: 18.4%

Conclusion

Investing in energy stocks offers significant potential for long-term growth, especially as the world transitions toward more sustainable energy sources. The energy sector is integral to the global economy, with continued demand for oil, gas, and renewables driving industry opportunities. However, like all investments, energy stocks come with their own set of risks, including market volatility, regulatory changes, and environmental considerations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities market are subject to market risks, read all the related documents carefully before investing.