Best Oil & Gas Stocks in India

When looking at the best oil and gas stocks in India, several companies stand out. Reliance Industries is a top player, known for its diverse operations in refining, petrochemicals, and retail. For those interested in the exploration sector, Oil India Limited is worth considering. Petronet LNG, focused on importing and regasifying liquefied natural gas, is another strong contender.

When evaluating these stocks, consider factors like the company's financial health, market share, and growth potential. Keep in mind that oil and gas stocks can be volatile due to fluctuating global oil prices and changing government policies. It's always wise to do thorough research and possibly consult a financial advisor before making investment decisions in this sector.
 

What are Oil & Gas Company Stocks?

Oil and gas company stocks are ownership shares in businesses of the oil and gas industry. These companies work on finding, extracting, refining, and selling oil and natural gas products. When you buy these stocks, you're investing in a part of the company.

There are different types of oil and gas companies. Some focus on exploration and production, searching for new oil and gas reserves and getting them out of the ground. Others concentrate on refining crude oil into usable products like petrol or diesel. Some companies handle transportation, moving oil and gas through pipelines or ships. There are also companies that sell these products to consumers and businesses.

The value of oil and gas stocks can change a lot based on global oil prices, which can go up or down quickly. These stocks can be affected by things like political events, new energy policies, or changes in supply and demand for oil and gas.

Investing in oil and gas stocks can be risky but also potentially rewarding. They often pay dividends, which means you get a share of the company's profits. However, it's important to research carefully and understand the risks before investing in this sector.
 

 

Best Oil and Gas Stocks in India 2024

Here is a compiled list of the best oil and gas stocks in India for 2024. Let’s take a look at them before making any further investment:

Company Name IndustryCMP in RsMarket Cap in Cr RsP/E Ratio52-week high 52-week low
Reliance Industries LimitedOil Exploration and Production 2,908.3019,67,76128.73,0292,220.30
Oil and Natural Gas Corporation (ONGC)Oil Exploration and Production2673,35,8936.68292.95155.85
Indian Oil Corporation (IOC)Refineries 164.372,32,1105.54196.8085.5
Bharat Petroleum Corporation Limited (BPCL)Refineries 296.301,28,5494.80343.98165.73
Hindustan Petroleum Corporation Limited (HPCL)Refineries 334.6571,2074.45396.53159.47
Gas Authority of India Limited (GAIL)Gas Distribution 213.151,40,14813.9232.20103.50
Oil India LimitedOil Exploration and Production699.2575,8279.66711.95240.80
Petronet LNG LimitedOil Exploration and Production318.2047,73013.5334.05191.70
Castrol India LimitedLubricants 207.4220,51623.6230.40119.30
Gujarat Gas LimitedGas Distribution 612.9042,19138.7648.95397.05

Disclaimer– All the information mentioned above is accurate as of 25th June 2024. However, it is important to conduct a thorough research prior to making any investment decisions in these stocks.
 

Overview of Best Oil & Gas Stocks in India

Reliance Industries Limited

Reliance Industries Limited is a giant in India's oil and gas sector. They run one of the world's largest oil refineries in Jamnagar, Gujarat. The company is also big in petrochemicals, retail, and telecom (Jio). Known for innovation, Reliance is moving into renewable energy too. Their stock is popular due to the company's strong financial performance and growth plans.

  • Reliance Industries has reduced debt.
  • The company’s ROE stands at 9.23%.
  • Conglomerate Reliance Industries Limited (RIL) reported a consolidated net profit of Rs 18,951 crore for the quarter ended March 2024.

Oil and Natural Gas Corporation (ONGC)

Oil and Natural Gas Corporation is India's largest oil and gas exploration company. They find and produce most of India's crude oil and natural gas. The government owns a big part of ONGC. They operate both onshore and offshore, including in deep waters. ONGC is crucial for India's energy security and often pays good dividends to shareholders.

  • Oil and Natural Gas Corporation is trading at 1.00 times its book value
  • The comapny is providing a good dividend yield of 4.21%.
  • ONGC has been maintaining a healthy dividend payout of 33.4%.
  • The company reported a jump of nearly 78% in its consolidated net profit at Rs 11,526.53 crore in the quarter ending March 2024.

Indian Oil Corporation (IOC)

Indian Oil Corporation is India's biggest oil company by sales. They run many petrol pumps across the country and own major oil refineries. IOC also makes petrochemicals and is expanding into natural gas. The company plays a key role in India's fuel supply and often adjusts fuel prices. Their wide presence makes them a steady performer in the stock market.

  • Indian Oil Corporation is providing a good dividend yield of 7.30%.
  • The company has delivered good profit growth of 19.3% CAGR over last 5 years
  • IOC has been maintaining a healthy dividend payout of 43.0%
  • IOCL reported a consolidated net profit of 49.3% to Rs 5,149 crore in Q4FY24.

Bharat Petroleum Corporation Limited (BPCL)

Bharat Petroleum Corporation Limited is another major player in India's oil and gas sector. They refine oil and sell fuel through a large network of petrol pumps. The government plans to sell its stake in BPCL, which could change the company's future. BPCL is known for its efficient operations and has been expanding its presence in natural gas and renewable energy.

  • Bharat Petroleum Corporation has reduced debt.
  • The company has delivered good profit growth of 28.2% CAGR over the last 5 years.
  • BPCL has been maintaining a healthy dividend payout of 28.6%.
  • BPCL reported a consolidated net profit of Rs 4,789.57 crore in the fourth quarter ending March 24.

Hindustan Petroleum Corporation Limited (HPCL)

Hindustan Petroleum Corporation Limited is a key fuel retailer and refiner in India. They operate two major refineries and thousands of petrol pumps. The company is now a subsidiary of ONGC. HPCL is known for good dividend payouts and is working on expanding its refining capacity. They're also moving into natural gas and electric vehicle charging.

  • Hindustan Petroleum Corporation Limited has a return on equity (ROE) of 40.4%.
  • HPCL reported a consolidated net profit to Rs 2,709 crore in the fourth quarter FY24.

Gas Authority of India Limited (GAIL)

Gas Authority of India Limited is India's largest natural gas company. They transport and distribute natural gas across the country through a vast pipeline network. GAIL also produces petrochemicals. As India aims to increase natural gas use, GAIL is set to play a crucial role. They're also exploring renewable energy options like solar and wind power.

  • Gas Authority of India Limited has been maintaining a healthy dividend payout of 43.8%
  • GAIL reported a massive 289% rise in consolidated net profit at Rs 2,468.71 crore in the fourth quarter (January-March) of financial year 2023-24.

Oil India Limited

Oil India Limited is smaller than ONGC but still important in oil and gas exploration. They operate mainly in India's Northeast and have some overseas projects too. Oil India is known for its steady performance and regular dividend payments. The company is also investing in renewable energy to diversify its business.

  • Oil India Limited has been maintaining a healthy dividend payout of 26.4%.
  • The company's working capital requirements have reduced from 20.2 days to 11.1 days.
  • Oil India has reported consolidated net profit of Rs 2,332.94 crore in Q4FY24.

Petronet LNG Limited

Petronet LNG specialises in importing and processing liquefied natural gas (LNG). They own large LNG terminals where they convert imported LNG back into gas form. As India's gas demand grows, Petronet's role becomes more important. They're planning to expand their capacity and enter new areas like small-scale LNG distribution.

  • Petronet LNG has been maintaining a healthy dividend payout of 36.8%.
  • The company reported a net profit of Rs 738 crore in the March quarter financial year 2024.

Castrol India Limited

Castrol India is a leading lubricant company, part of the global BP group. They make oils and lubricants for vehicles and industries. Castrol is known for its strong brand and wide distribution network. While not a traditional oil and gas company, they benefit from the growth in vehicle sales and industrial activity in India.

  • Castrol India is almost debt free.
  • The stock is providing a good dividend yield of 3.62%.
  • It has a good return on equity (ROE) track record of 45.7% in 3 years. 
  • The company has been maintaining a healthy dividend payout of 78.8%
  • The company’s net profit rose 25% to Rs 242 crore on healthy demand in Q4FY24.

Gujarat Gas Limited 

Gujarat Gas Limited is India's largest city gas distribution company. They supply natural gas to homes, vehicles, and industries, mainly in Gujarat. As more cities switch to natural gas for cooking and transport, Gujarat Gas is set to grow. They have a strong presence in industrial areas, which helps maintain steady demand for their services.

  • Gujarat Gas Limited is almost debt free.
  • The company has a good return on equity (ROE) track record of 21.0% in 3 years.
  • Gujarat Gas has been maintaining a healthy dividend payout of 24.9%.
  • The city gas distributor's net profit surged 85.7% YOY to Rs 410.48 crore in the January-March period of FY 23-24.
     

Factors to Consider Before Investing in Oil & Gas Stocks in India

Identifying oil and gas stocks in India for investing requires careful research and analysis. Here are a few factors to consider before investing in Oil and Gas stocks in India:

  • Research the Oil and Gas Industry: Learn about the various parts (upstream, midstream, and downstream) and their related risks and benefits.
  • Track oil and gas prices: Understand the elements that affect oil prices. Examples include worldwide supply and demand, geopolitical events, and economic situations.
  • Risk tolerance: Determine your risk tolerance and then select stocks accordingly. Large integrated corporations provide stability, but smaller exploration companies may be riskier but provide more potential returns.
  • Investment Horizon: Think about your long-term goals and select the top 100 Indian oil and gas firms with strong growth potential or sustainable dividends.
  • Financial Performance: Examine the company's financials, including revenue, profitability, debt levels, and cash flow.
  • Financial Analysis: Examine the company's financial documents, which include income statements, balance sheets, and cash flow reports. 
  • Management Team: Find out about the management team's background and performance history.
  • Competitive Environment: Examine how the business fits within the sector and what advantages it has.
  • Growth Potential: Evaluate the company's chances for future expansion, taking into account both new initiatives and acquisitions.
  • Diversify Portfolio: Avoid putting all of your money in one place. Consequently, invest in a range of oil and gas stocks as well as other industries to reduce risk. 
     

How to Invest in Natural Gas & Oil Shares in India?

There are various ways to invest in Indian oil and gas industries. Initially, you can invest in publicly traded Indian oil and gas businesses by opening a trading account with a stockbroker. You can also look at exchange-traded funds (ETFs) and mutual funds that concentrate on the energy industry and other leading oil and gas firms in India. Take into account making investments in overseas energy companies that are listed on stock exchanges abroad. For global exposure, you can use overseas brokerage accounts or exchange-traded funds (ETFs) that track global energy indices. 
 

Conclusion
Energy needs are growing faster as income levels and population are witnessing rising trends in the country. Since renewable energy stocks are increasing due to the government’s push for net zero emissions by 2070, investing in natural gas and oil shares can offer attractive returns shortly. It is also important to plan your investment goals and risk appetite before investing in any natural gas share price or petroleum stocks in India. However, investors can invest through an online trading app to avoid the hassle of researching and choosing the best oil and gas company stocks.

FAQs for Best Oil & Gas Stocks in India

Following are the steps to invest in oil & gas stocks:

  1. Open an account with a brokerage firm. 
  2. Fund your account. 
  3. Research oil & gas companies and select the ones you want to invest in. 
  4. Buy shares of those companies.

According to experts, investing in natural gas and oil shares can be a good time on a long-term basis. However, it’s important to do a thorough research or consult a financial advisor before investing.

Oil and Natural Gas Corporation (ONGC) is one of the largest oil shares of the Oil industry. It is important to the Indian economy as it accounts for 70% of India’s crude oil production.

Below are some sectors that have higher potential to boom in 2024:

  • Defence.
  • Infrastructure.
  • Power & Renewable Energy. 
  • Banking & Financials. 
  • Tourism & Hospitality.

A  strong combination of investment advantages are listed below:

  • Tax incentives
  • Higher return on investment potential
  • Long term passive income generation 
  • Portfolio diversification