Best Oil Shares in India 2024

  • 10 May 2024
  • Read 26 mins read

The oil and gas industry is rapidly and constantly changing daily, including the other energy industries in India. The oil industry meets two-thirds of the country's basic needs. India's oil and gas production has made a massive contribution to the economy to the vastness of the nation.  Nevertheless, the nation's domestic gas and oil output cannot keep up with the rising demand. India thus developed a strong reliance on imports. Investor interest in purchasing shares in Indian companies that produce gas and oil has surged due to this situation. Oil and gas business stocks have gained popularity as investment options due to the shifting market conditions. We will, therefore, go over some crucial details regarding oil and gas share pricing in this article. Thereby, let's get started. 

What are Oil & Gas Company Stocks?

Publicly traded companies that explore, produce, refine, and distribute oil and gas share prices are known as oil company shares. These oil shares are often involved in three types of activities: midstream (transportation and storage), downstream (refining and distribution of petroleum products), and upstream (exploration and drilling).

These stocks are traded on the stock market at the rates shown for the oil firm shares in the oil shares list. Therefore, many variables may have an impact on the price of NSE oil shares as well as Indian firms that deal in oil and gas. This covers market trends, the company's financial performance, and potential for future growth. Therefore, there are several ways in which you might invest in India's leading oil equities. This includes investing in exchange-traded funds (ETFs) that manage the performance of the oil industry, buying stock in oil firms, or allowing a portfolio with an emphasis on the oil and gas industry. Investing in a portfolio lowers the hazards including making a number of choices at the same time The dangers associated with simultaneously investing in several firms are reduced through portfolio investment.

Investing in the top oil sector stocks in India may thus offer the chance to profit from the growing prices of gas and oil shares. However, it is crucial to remember that buying oil equities might be risky because of their cyclical nature. Outside variables may also impact the price of oil shares.

 

List of Best Oil Sector Stocks in India

We have put up a list of some of the most well-known oil shares in India. Let's explore them now. 

Stock NameMarket Cap (in Cr)
Jindal Drilling and Industries Ltd₹22.64 billion
United Drilling Tools Ltd₹5.66 billion
Seamec Ltd₹27.77 billion
Aban Offshore Ltd₹4.01 billion
Alphageo (India) Ltd₹2.46 billion
Aakash Exploration Services Ltd₹1.08 billion
Deep Energy Resources Ltd₹5.79 billion
Dolphin Offshore Enterprises (India) Ltd₹17.40 billion
Global Offshore Services Ltd₹1.20 billion 
Oil Country Tubular Ltd₹2.08 billion

 Disclaimer: The market capitalisation mentioned above is accurate as of date, 29th April, 2024. However, conducting your research before making any investment decisions in these stocks is important.

Oil and Gas Company's Shares – A Brief Overview

Let's take a closer look at a few share lists from oil and gas companies.

  • Jindal Drilling and Industries Ltd

    With a focus on mud logging and directional drilling, Jindal Drilling & Industries Ltd (JDIL) is a well-known company in the Indian offshore drilling and associated services market. JDIL has a market capitalization of ₹2,268.06 crore. The price-to-earnings (PE) ratio of the firm is 30.33, which indicates how much its stock is worth about its earnings. Furthermore, JDIL's price-to-book (P/B) ratio of 1.77 indicates how the market values the company's book value per share. These financial indicators shed light on how JDIL positions itself in the market.
  • United Drilling Tools Ltd

    United Drilling Tools Ltd. is an established player in the oil and gas sector, specialised in cutting-edge drilling equipment and solutions. It has a market value of ₹564.83 crore. The price-to-earnings (PE) ratio of United Drilling Tools is 59.08, which shows how much the market values the company's shares about net profits. Furthermore, United Drilling Tools' price-to-book (P/B) ratio of 2.32 indicates how the market values the company's book value per share. These financial indicators offer light on the business and have become attractive as an investment in the oil and gas equipment sector.
  • Seamec Ltd

    Seamec is currently trading 0.44% lower at Rs 1,089.20 compared to its last closing price, with a trading range between Rs 1,113.00 and Rs 1,075.00. Over the course of this year, Seamec has delivered a return of 4.96%, while in the last five days, it has shown a slight increase of 0.51%. The company's trailing twelve months (TTM) price-to-earnings (P/E) ratio stands at 42.10, notably higher than the sector P/E ratio of 21.18. Analyst coverage on Seamec indicates that one analyst has initiated coverage, with a strong buy rating from one analyst and no sell ratings. Seamec's listed peers include Garden Reach Shipbuilders & Engineers and Shipping Corporation Of India. The company boasts a promoter holding of 72.04% and a public holding of 27.96%. Mutual fund holding in Seamec as of March 31, 2024, stood at 1.77%, with a decrease from the previous quarter, while FII holding was at 3.15%, showing an increase from the last quarter.
  • Aban Offshore Ltd

    Aban Offshore is currently trading 3.85% higher at Rs 68.45 compared to its last closing price, with a trading range between Rs 69.00 and Rs 66.10. The stock has delivered a positive return of 26.84% over the year but has seen a decline of -6.48% in the last 5 days. Among its listed peers are Deep Energy Resources (-0.21%) and United Drilling Tools (-0.94%). Aban Offshore has a promoter holding of 46.00% and public holding of 54.00%. Mutual Fund holding in Aban Offshore as of
  • Alphageo (India) Ltd

    Alphageo (India) Ltd, established in 1987 and headquartered in Hyderabad, is an Indian seismic service provider specialising in geophysical seismic data acquisition, processing, and interpretation services. With a market capitalisation of ₹247.11 crore, The company's price-to-earnings (PE) ratio stands at 55.25, reflecting the market's valuation of its stock relative to its earnings. Additionally, Alphageo's price-to-book (P/B) ratio is 0.90, indicating the market's assessment of its book value per share. These financial metrics provide insights into Alphageo's market position
  • Aakash exploration ltd

    Aakash Exploration Services is currently trading 0.90% lower at Rs 10.95 compared to its last closing price, within a price range of 11.20 and 10.90. Over the course of this year, the stock has declined by -3.91%, with a -0.90% decrease in the last 5 days. In terms of valuation, the company has a trailing twelve months (TTM) P/E ratio of 31.27, higher than the sector P/E of 21.18. Its listed peers include United Drilling Tools (-0.94%), Aban Offshore (3.85%), and Alphageo India (-3.94%). Aakash Exploration Services has a promoter holding of 66.67% and public
  • Deep Energy Resources Ltd

    Deep Energy Resources is currently trading at Rs 191.25, showing a decrease of -0.21% from its previous closing price. Over the trading session, it has ranged between Rs 197.10 and Rs 188.90. The stock has witnessed a negative return of -1.49% so far this year, while in the last five days, it has shown a positive return of 5.56%. Among its listed peers are Deep Industries (-0.63%) and Asian Energy Services (4.62%). Notably, Deep Energy Resources itself is listed as a peer with a slight decrease of -0.21%. The company maintains a significant promoter holding of 67.99% while the public holds the remaining
  • Dolphin Offshore Enterprises (India) Ltd

    Dolphin Offshore Enterprises (India) Ltd (DOEIL), which has a market valuation of ₹1,740.00 crore, is a well-known supplier of undersea services to the Indian oil and gas sector. Since its founding in 1979, DOEIL has focused on providing broad undersea solutions. With a price-to-earnings (PE) ratio of 32.36, the company's stock is valued in the market. Furthermore, DOEIL's price-to-book (P/B) ratio of 8.48 indicates that the market values its book value per share at a premium. Dolphin Offshore Enterprises, which has decades of expertise in the field, is still vital to offshore operations.
  • Global Offshore Services Ltd

    Global Offshore Services is trading at Rs 50.09, reflecting a decrease of -0.65% compared to its last closing price. Over recent trading sessions, the stock has fluctuated within a price range of Rs 51.98 and Rs 48.50. Year-to-date, Global Offshore Services has experienced a decline of -14.30%, while in the last 5 days, it has shown a modest increase of 5.33%. The company's trailing twelve-month (TTM) price-to-earnings (P/E) ratio is 0.27, significantly lower than the sector P/E of 21.18. In its last quarter, Global Offshore Services reported a net profit of -3.18 Crores. Among its listed peers are Shreyas Shipping & Logistics (-1.85%), Essar Shipping (-1.84%), and Global Offshore Services itself. The company's promoter holding stands at 33.29%, with the remaining 66.71% held by the public. Mutual Fund holding in Global Offshore Services decreased to 0.12% as of June 30, 2022, while FII holding decreased to 0.41% as of March 31, 2024, compared to the previous quarter.
  • Oil Country Tubular Ltd

    Oil Country Tubular is currently trading 1.99% lower at Rs 42.79 compared to its previous closing price, fluctuating within the range of 43.66 and 42.79. The stock has shown a year-to-date increase of 50.58% but a decrease of -1.85% over the last five days. In its last quarter, the company reported a net profit of -16.15 Crores. Listed peers of Oil Country Tubular include Deep Energy Resources (-0.21%), United Drilling Tools (-0.94%), and Aban Offshore (3.85%). The company holds a 49.22% promoter holding and 50.78% public holding. Mutual Fund holding in Oil Country Tubular stood at 0.05% as of March 31, 2022, indicating a decrease from the previous quarter. Similarly, FII holding was at 0.01% as of March 31, 2024, also decreasing from the last quarter.

Oil and Gas Sector – A Synopsis

Oil was discovered in Makum near Margherita, approximately 8 miles from Digboi, in 1867, when the Indian oil and gas industry began. Since then, the industry has advanced significantly. The Indian government has thus taken several actions to strengthen the business and increase its level of independence due to the country's expanding gas resources.

The government of India's Ministry of Petroleum and Natural Gas has to oversee the country's gas and petroleum industry which tries to take care of every connection in the chain of supply, import, export, exploration, distribution and marketing which are a few of them.

Currently, natural gas and renewable energy sources are becoming less hazardous to the environment and cleaner energy sources for the Indian oil and gas industry. Consequently, the government's efforts to manage the use of natural gas and promote investment in renewable energy sources like solar and wind power indicate a movement towards a more sustainable energy mix.

The projected expansion of the Indian oil and gas industry is anticipated to be moderate, and the country's reliance on crude oil as an energy source is projected to decline gradually. As a result, enterprises in the Indian oil and gas industry are investigating novel opportunities and adjusting to new obstacles. Consequently, purchasing crude oil stock in India could be a profitable investment option. Investors must conduct their due diligence and/or speak with a financial expert as usual.

How to Identify Best Gas and Oil Shares for Investing?

To identify the best oil and gas shares in India for investment, thorough research and analysis are necessary, with key steps to follow.

Know about the Business

  • Understanding the oil and gas industry: You need to understand every industry ( Upstream, midstream, and downstream ) and the advantages and risks which go hand in hand.
  • Watchful eye: Monitoring the eye on the oil and gas industry and being wise about the parts which affect them which include marketplace, geopolitical industries, and international supply and demand.  

Decide On Your Oil Share Investing Requirements:

  • Risk Tolerance: Establish your level of risk tolerance before making investment selections. Smaller exploratory businesses might be riskier but have bigger potential profits; large integrated organisations provide consistency.
  • Funding the horizon: In light of your long-term objectives, select the top 100 Indian oil and gas businesses that have the potential for steady dividend increase or expansion.
  • Monetary effectiveness: Examine the cash flow, debt levels, sales, profitability, and cash flow of the organisation. 

Investigate Specific Oil Shares

  • Financial Analysis: Analyse the income, balance, and statement of cash flows together with the balance sheet of the organisation.
  • Administration Group: Find out about the management team's background and performance history.
  • Economic Conditions: Examine how the business fits within the sector and what advantages it has.
  • Potential Opportunity: Evaluate the company's chances for future expansion, taking into account both new initiatives and transactions.
  • Spread out your holdings: Avoid putting all of your assets in one place.Therefore, to mitigate risk, invest in a variety of oil and gas stocks and other sectors.

Features of Gas & Oil Shares

Here are a few salient features associated with stocks in the oil and gas sector: 

  • Excessive Risk:

    The share prices of gas and oil are quite erratic. As a result, there may be a great deal of fluctuation in the price of gas and oil shares, which might put investors at risk. For those who can time the market perfectly, though, it may also present possibilities.
  • Seasonal:

    There are boom and bust phases in the oil and gas industry since it is cyclical. Investors may find this cyclicality problematic as it might be hard to determine when the next boom or bust will happen.
  • Paying out Huge Payouts:

    This is a common practice for oil and gas firms. As such, it may be a useful strategy for investors to profit from their capital.
  • Accessibility to Global Parameters: 

    Geopolitical developments and economic conditions, among other global variables, have a significant impact on the oil and gas industry. Because of this, investing in the industry may be challenging, but there may be chances for those who are aware of these concerns.
  • Opportunity for an Extended Period: 

    Over the next several years, investors expect to see a sustained increase in the demand for equities in the oil and gas industry worldwide. Long-term growth for oil and gas corporations might result from this.
  • ESG Investing:

    A rise in demand for oil and gas firms that can prove their adherence to ESG principles may result from investors' growing interest in sustainability-focused businesses.

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

There are numerous ways to invest in Indian oil and gas industries. Initially, you may invest in publicly traded Indian oil and gas enterprises by creating a trading account with a stockbroker.

You might additionally look at exchange-traded funds (ETFs) and mutual funds that concentrate on the energy business and other leading oil and gas firms in India. Take precautions when making investments in overseas energy firms that are listed on stock markets abroad. For around-the-world exposure, you can use overseas brokerage accounts or ETFs (exchange-traded funds) that adhere to global energy benchmarks.

Types of Oil Shares

Each stage of this procedure involves many companies, making the oil and gas sector one of the most significant and significant ones in the wider economy. These India oil share prices can, therefore be divided into three groups, which are listed below:

  • Upstream Stocks

    The search for and extraction of natural gas and oil are among the primary activities of upstream stocks. They must locate and recover these underground treasures. Therefore, an example of an upstream stock would be the Oil and Natural Gas Corporation (ONGC).
  • Midstream Stocks

    Involved with the storage and transportation of natural gas and oil. They oversee the storage facilities, terminals, and pipelines that carry those products from where they are generated to refining or other clients. Thus, a prime example of a midstream stock is Bharat Oil & Waste Management Limited.
  • Downstream Stocks:

    Oil companies in the downstream sector produce and sell natural gas and petroleum products. They partner with upstream crude oil providers to transform it into products such as jet fuel, diesel, and gasoline. Additionally, they deliver these goods to clients like fuel stations and airlines. Oil Corporation of India share price (IOCL) is a downstream stock example.

Who Should Invest in Indian Oil & Gas Companies?

Investment in Indian oil and gas firms is available for anyone, even though it has the most significant potential for long-term managers and those who take risks. Moreover, many Indian oil and gas firms have a track record of continuously paying dividends to their shareholders. Before investing, one must take their investment goals and tolerance for risks into consideration.

Benefits of Investing in Oil Shares

The steady need for energy and the possibility of high dividends are only a couple of benefits of investing in oil industry companies. Consequently, a few additional advantages of purchasing oil shares are as follows:

  • Diversification: Incorporating the oil sector into a diversified oil portfolio investment might be beneficial. It exposes businesses other than standard stock markets, such as healthcare and technology. 
  • Likelihood of High Returns: There are times when there is an abundance of demand and a limited supply, leading to oil and gas enterprises being highly lucrative. It may result in the possibility of large profits for investors.  
  • Monthly revenue: Dividend payments to shareholders are a consistent source of revenue for many oil and gas businesses. 
  • The cost of living: The price of oil and gas stocks typically increases with inflation. Over time, this can assist investors in safeguarding their purchasing power. 
  • Political in nature Stability: Compared to other developing markets, the share prices of some oil corporations are based in politically stable nations, making them relatively safe investments.

Challenges While Investing in Oil Shares India

All investments have their share of obstacles and problems. So, let's explore the two main challenges to investing in the top Indian oil business shares.

  1. Economic changes: The severe swings in prices in oil and gas businesses are one of the major hurdles for Indian investors in oil-related bonds. Several variables, like global demand and supply, political instability, and unforeseen events, might affect the value of India oil stocks.  
  2. Ecological Concerns: The environmental impacts of fossil fuels present investors with another difficulty when purchasing oil stocks in India. As environmental consciousness rises, stakeholders are placing pressure on Indian oil and gas corporations to lower their carbon footprint and switch to sustainable sources. As a result, it may be difficult for Indian oil and gasoline stocks to stay successful.

Conclusion
Investing in India's top oil sector stocks can benefit from the growth of oil and gas share prices, provided investors evaluate market trends, financial performance, and future growth prospects. Diversifying investments across various stocks, ETFs, or energy sector portfolios can mitigate risk and capitalise on dividend income or long-term growth. However, investors must acknowledge inherent risks like price volatility and market conditions. Oil shares offer diversification benefits, high returns, and stability in inflation-affected markets. Finally, using a reliable stock market app is important for any type of investment.

FAQs on Oil Shares in India 2024

Oil shares offer exposure to the energy sector, which is crucial for global economic activity. They can potentially yield high returns during periods of high demand, making them ideal for a diversified investment portfolio.

Events in geography, dynamics of global supply and demand, price swings, environmental concerns, and regulatory changes can all have an enormous effect on oil shares and investments.

India's oil shares are divided into three different groups: upstream, midstream, and downstream equities. These categories are based on all aspects of oil production, distribution, transportation, storage, and refining.

Evaluating oil shares involves considering financial performance, debt levels, profitability, management team, growth prospects, industry trends, oil price forecasts, and geopolitical developments.

Oil shares offer potential capital appreciation, dividend income, exposure to global economic trends, and inflation hedge.