Best Oil and Gas Stocks to Invest Based on 5Y-CAGR

The oil and gas industry is one of the critical driving sectors of the Indian economy. India is a growing economy, and investing in oil and gas stocks can benefit from economic and return perspectives. Oil demand in India is expected to double, reaching 11 million barrels per day by 2045. Natural gas consumption in India is anticipated to increase by 25 billion cubic meters, with an average annual growth rate of 9% until 2024.

Future investments in the sector and an extensive increase in demand from domestic and industrial segments are evident. In July 2021, The government approved 100% foreign direct investment in upstream and private sector refining projects. Moreover, India plans to commercialise 50% of its strategic petroleum reserve (SPR) to raise funds to build additional storage tanks to offset significant price hikes in the future. Let’s take a closer look at India’s top oil and gas stocks based on 5-year CAGR.

Top Oil And Gas Stocks As 5Y CAGR

Here is the list of the best oil and gas stocks.

Note: The list of the best oil and gas stocks is as of June 26, 2024. The stocks belong to the Nifty 500 and are sorted based on 5-year CAGR.

1. Chennai Petroleum Corporation Limited

Chennai Petroleum Corporation Limited refines crude oil to produce and supply various petroleum products. It also manufactures and sells lubricating oil additives. It operates one refinery near Chennai in Manali, with a capacity of 10.5 million metric tonnes per annum (MMTPA).

For the January-March 2024 quarter, revenue increased to ₹20,822.95 crore from ₹20,453.93 crore in the previous quarter, ended December 2023, and Net Profit increased to ₹612.38 crore from ₹359.99 crore in the last quarter ended December 2023.

Key ratios

• P/E ratio: 5.26
• ROE: 31.55%
• EPS:182.07

2. Great Eastern Shipping Company Ltd

Great Eastern Shipping Company Ltd and its subsidiaries are significant participants in the Indian shipping industry and the oil drilling services sector.

For the January-March 2024 quarter, revenue increased to ₹1,154.86 crore from ₹996.18 crore in the previous quarter, ended December 2023, and Net Profit increased to ₹726.73 crore from ₹487.77 crore in the last quarter ended December 2023.

Key ratios

• P/E ratio: 7.34
• ROE:22.39%
• EPS: 162.25

3. Aegis Logistics Ltd

Aegis Logistics, formerly Aegis Chemical Industries Ltd., was incorporated in 1956. The company provides logistic solutions for the oil, gas, chemical, and petrochemical industries.

For the January-March 2024 quarter, revenue decreased to ₹721.51 crore from ₹824.47 crore in the previous quarter ended December 2023, and Net Profit increased to ₹125.88 crore from ₹107.76 crore in the last quarter ended December 2023.

Key ratios

• P/E ratio:70.44
• ROE:17.29%
• EPS: 11.73

4. Oil India Ltd

Oil India Ltd explores, develops, and produces crude oil and natural gas. The company also transports crude oil, produces LPG, and offers services related to exploration and production activities for oil blocks.

For the January-March 2024 quarter, revenue decreased to ₹5,756.73 crore from ₹5,815.02 crore in the previous quarter, ended December 2023, and Net Profit increased to ₹2,028.83 crore from ₹1,584.28 crore in the last quarter ended December 2023.

Key ratios

• P/E ratio:13.65
• ROE:12.58%
• EPS: 51.20

5. Mangalore Refinery & Petrochemicals Limited

Mangalore Refinery & Petrochemicals Limited (MRPL) was established as a joint venture between the AV Birla Group and Hindustan Petroleum Corporation Limited (HPCL). It is a subsidiary of Oil & Natural Gas Corporation (ONGC). The company primarily focuses on refining crude oil, petrochemical operations, trading aviation fuels, and distributing petroleum products through retail outlets and transport terminals.

For the January-March 2024 quarter, revenue increased to ₹29,190.05 crore from ₹28,383.41 crore in the previous quarter, ended December 2023, and Net Profit increased to ₹1,136.84 crore from ₹387.06 crore in the last quarter ended December 2023.

Key ratios

• P/E ratio:10.53
• ROE:27.14%
• EPS: 20.52

Things to keep in mind when investing in the Indian oil and gas sector stocks

• Cyclical stocks: These stocks are often cyclical, meaning there will be phases of outstanding performance and downtrends.
• Fluctuation and volatility: Oil companies’ stock prices are impacted by geopolitical situations, inflation, and supply crunch.
• Unpredictable: Oil and gas production is highly unpredictable, which impacts a company’s profitability. It is also a significantly capital-intensive industry that includes test runs, drilling, heavy machinery etc.

Conclusion

Investing in the Indian oil and gas sector can be a good opportunity, given its integral role in India’s economy and projected expansion. However, it’s essential to consider the risks associated with this sector. You can conduct thorough research and understand its financials before investing in the best oil and gas stocks.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.