Best Oil and Gas Stocks in India

The global energy system is undergoing rapid transformation, and simultaneously, the oil and gas industry is pivotal in fulfilling a considerable portion of India’s energy needs. In the downfall of 2022, best oil and gas stocks in India were considered the shining stars. On 4th November 2024, Nifty Oil & Gas (NIFTOILGAS) was down by 2.48% as oil prices rose from 2% by OPEC. 

The market size of the Indian oil and gas industry is estimated to increase from 37.12 billion cubic meters to 49.12 billion cubic meters by the year 2029. One can generate potential returns on their investment during this period.

Shares of oil and gas companies are popular choices to invest valuable money. And, if you also want to know the best oil and gas stocks in India to diversify your portfolio for balanced returns, you’ve reached the right spot.

List of Best Oil and Gas Stocks in India For 2024

*Data is updated as of 6th November 2024.

Overview of Best Oil and Gas Stocks in India

1. Reliance Industries Ltd.

This Indian-multinational conglomerate is engaged in practices such as petroleum refining, hydrocarbon production/exploration, petrochemicals, renewables like solar and hydrogen, etc. The market capitalisation of Reliance Industries Ltd. is INR 17,70,000 crores.

The company’s revenue has increased by 9.69% over the last five years, and its price-to-equity ratio is 26.06. Being a giant player in the Indian oil and gas industry, Reliance Industries Ltd. runs one of the world’s largest oil refineries in Jamnagar, Gujarat.

With a considerable position in the oil and gas sector, Reliance has successfully attracted investors’ interest in the Indian stock market. According to ICICI Direct’s website, this organisation is about to issue bonus shares, which will be credited to the consumer’s account by 18th November 2024. The investment value of stocks will remain unchanged.

2. Oil and Natural Gas Corporation Ltd.

Oil and Natural Gas Corporation Ltd. is one of the largest companies in India’s crude oil and natural gas production/exploration. It produces over 1.26 million barrels of oil equivalent and handles around 71% of the domestic production solely. The market capitalisation of ONGC is INR 3,36,000 crores, and its price-to-equity ratio is 7.45.

Over the past few decades, investors have considered it one of the best oil and gas stocks in India to generate higher returns on investments. The good thing about this stock is that the government owns a big part of it.

ONGC operates both offshore and onshore to ensure India’s energy security and often pays investors impressive dividends.

3. Indian Oil Corporation Ltd.

When considering sales, Indian Oil Corporation Ltd. was found to be the biggest oil company in the country. It operates in numerous segments, such as petrochemicals and petroleum products. The current market capitalisation of this one of the best oil and gas stocks in India is INR 2,02,000 crores, and its one-year return is 44.97%.

The company is headquartered in New Delhi, India and supported by a robust infrastructure of 70.05 million metrics tone per annum. With over 34,000 fuel stations nationwide, Indian Oil Corporations Ltd. successfully built a giant network to grow its global presence in Bangladesh, Singapore, the United States, Myanmar, Sri Lanka, the United Arab Emirates, etc.

The price-to-equity ratio of IOC is 11.26, and its fundamentals are strong enough to diversify the investors’ portfolios.

4. Bharat Petroleum Corporation Ltd.

Bharat Petroleum Corporation Ltd., an India-based company, refines oil and sells fuel through 13,648 fully automated fuel stations. It is engaged in refining, producing, and distributing petroleum products.

The name itself shows that the organisation deals in petroleum products. But what types of petroleum products? It includes smartFleet, Speed97, PetroCard, SmartDrive, UFill, etc. The market capitalisation of Bharat Petroleum Corporation Ltd. is INR 1,35,000 crores, and its price-to-equity ratio is 10.21.

The company has diversified its business portfolio with Bharatgas, refineries, gas operations, commercial solutions, MAK Lubricants, and other fuel services. It is one of the best oil and gas stocks, generating around 71.24% return in one year.

5. Hindustan Petroleum Corporation Ltd.

One of the largest oil and gas companies, ONGC, bought the entire government holdings (51.11%) in Hindustan Petroleum Corporation Ltd. HPCL operates two major refineries and has become a key player in fuel retailing and refining in India with thousands of petrol pumps. Its market capitalisation is INR 82,080 crores, and its price-to-equity ratio is 19.64.

Investors in the Indian stock market consider HPCL one of the best oil and natural gas stocks, with a dividend yield of almost 5.42%. This organisation is categorised into two different segments. The first one is downstream petroleum, which focuses on the refinement and marketing of petroleum products, and the second segment is engaged in hydrocarbon exploration.

6. Petronet LNG Ltd.

This India-based organisation imports, stores, and regasifies the LNG (Liquefied Natural Gas). Petronet LNG Ltd. is a joint venture between four gas companies and GOI (Government of India). These four companies include GAIL, ONGC, BPCL, and IOCL.

Petronet LNG Ltd.’s market capitalisation is INR 50,700 crores, and the company handles around 75% of LNG imports in India. According to CEO A K Singh, Petronet has drawn an investment plan of INR 40,000 crores to expand the import capacity and increase profitability by 2028.

Investors expect higher returns from one of these oil and natural gas stocks, assuming the company will invest INR 12,685 crores in propane dehydrogenation. The price-to-equity ratio of this stock is 12.81, and it is currently trading at INR 333.30.

7. Adani Enterprises Ltd.

AEL (Adani Enterprises Ltd.) nurtured Adani Gas Ltd. to become a key player in various oil and gas industries. It offers services such as oil exploration, petrochemicals, and bunkering. It operates as the largest private sector-listed City Gas Distribution Company catering to 38 regions.

The market capitalisation of AEL. is INR 3,46,000 crores, and the price-to-equity ratio is 62.97. Adani Enterprises Ltd. recorded a surge of 664% YoY for the second quarter. Meanwhile, the sales of this organisation have increased by 15.66% YoY to INR 22,608 crores.

Investors consider it one of the best oil and natural gas stocks for the long term, as it can generate higher returns on their investment.

8. Aegis Logistics Ltd.

Aegis is an Indian company headquartered in Mumbai that offers logistics and supply chain services for oil, gas, and chemical products. Aegis Logistics Ltd. is a major importer of LPG (Liquefied Petroleum Gas) and provides LPG installation and interfuel services.

The market capitalisation of this company is INR 28,110 crores, and its price-to-equity ratio is 48.16. Recently, Aegis Vopak Terminals Ltd. (ATVNL), a subsidiary of Aegis Logistics Ltd., received an investment of INR 300 crores. Because of this potential investment, Aegis, one of the best oil and gas stocks in India, jumped 3% and offered potential returns to investors.

The organisation has storage sites in areas such as Haldia, Pipavav, Mangalore, and Mumbai to encompass sourcing, terminal operations, and real distribution of liquefied petroleum gas.

9. Mangalore Refinery and Petrochemicals Ltd.

Mangalore Refinery and Petrochemicals Ltd. is an Indian company that refines crude oil and offers petroleum products. The products of this organisation include motor gasoline, Xylol, Naphtha, Pet Coke, Bitumen, Furnace oil, etc.

The market capitalisation of Mangalore Refinery and Petrochemicals Ltd. stands at INR 29,660 crores, and the stock is currently valued at INR 168.69. Before investing in the best oil and gas stocks in India, you must know that Mangalore Refinery and Petrochemicals Ltd. is a subsidiary of ONGC.

Today, November 6th, 2024, MRPL gained 3.81%, and the company’s financial performance suggests we can expect a further rise of 14.21% in its stock.

10. GAIL (India) Ltd.

GAIL (Gas Authority of India Ltd.) handles nationwide natural gas transportation and distribution. Its vast pipeline network contributes to India’s aim of increasing natural gas use. Despite this, GAIL is exploring renewable energy alternatives such as solar and wind power. The market capitalisation of this company is INR 1,36,000 crores, and its price-to-equity ratio is 13.77.

After being incorporated in 1984, GAIL expanded its operations significantly to encourage the use of natural gas for environmental and sustainable considerations. The government of India holds around 51.45% of shares in this organisation, which makes it trustworthy for most stock market investors. GAIL is not only showing dedication to improving India’s energy sector but also investing in overseas energy projects.

Best Oil and Gas Stocks With Their Dividend and Buy Ratings

*Data is updated as of 6th November 2024.

How to Invest in Oil and Gas Stocks in India?

There are numerous ways to invest in oil and gas stocks in India. Let’s explore them together.

• Open a trading account with a broker with the required documents to invest in publicly listed companies in the stock market.
• Focus and research on the companies to identify fundamentally strong oil and gas stocks to earn higher returns.
• Buy stocks to invest invaluable money at the right time.
• Explore different mutual funds and ETFs (exchange-traded funds) relevant to the energy sector.

Open an international brokerage account to earn higher returns by investing in global energy companies listed on foreign stock exchanges.

Benefits of Investing in Oil and Gas Stocks

Having a diversified investment portfolio of oil and gas stocks in India could be a stepping stone to building wealth. Investors know that they can benefit from their investments. But what kinds of benefits? Let’s explore them together.

1. Increased ROI

Over the past few years, oil and gas stocks in India have given impressive returns on investments. For example, the share of Bharat Petroleum Corporation Ltd. has grown by around 72.86% in the last year. Investors in the best oil and gas stocks in India can earn the highest possible returns, which can go up to 100% or 200% in one or two years. Also, it can be seen that oil and gas companies have huge potential to earn profitability. One oil well can keep a business in the books for many decades. This makes the investment in oil and gas stocks beneficial for the investors.

2. Inflation Hedge

A rise in energy prices could be the reason behind oil companies’ increased revenues and profitability. Growth in revenue and profitability will positively affect stocks overall. An inflation hedge in the best oil and gas stocks in India helps investors protect their purchasing power over time. So, as an investor in the oil and gas sector, individuals can benefit from an inflation hedge.

3. Dividend Yield

Dividends are part of the company’s profit and are not included in returns. Businesses operating in the oil and gas industries often announce dividend payouts. It is just to protect the interest of investors so they can make regular income from their investments. But, no organisation can guarantee the dividend yield. It depends on the profitability of the business to cut or pay dividends to the investors. If we talk about the best oil and gas stocks in India, some companies also give around 6% to 8% dividend yield.

4. Evolving Technological Landscape

The new era of technology has reached the business world. Companies are rapidly adopting advanced technologies for better productivity and smooth operations. Likewise, modern technologies such as AI, ML, Blockchain, IoT, and automation play an important role in the oil and gas sector. They reduce production costs and increase the company’s profitability. With the increased profitability, stock prices show immense growth. Adopting evolving technologies would make the best oil and gas stocks attractive for long-term investments.

Returns By Best Oil and Gas Stocks in India in 1 Year

*Data is updated as of 6th November 2024.

Considerable Factors When Investing In Oil and Gas Sector Stock

Investing in the best oil and gas stocks in India is a good choice. However, one must consider different factors to make a diversified investment portfolio. Here are some factors you should consider before investing in oil and gas stocks.

• Pricing: One crucial factor in the oil and gas industry is price. Recently, on November 4th, 2024, OPEC increased oil prices by 2.48%, which resulted in a severe downfall in the stock market. The majority of oil and gas stocks fell due to the pricing strategy. Investors must research future trends related to oil prices before investing money in oil and gas stocks. Keeping a close eye on oil prices will surely help you make an informed investment decision.
• Company’s Fundamentals: When investing in any stock, it is essential to ensure its fundamentals and financial performances in the current and previous years. This would give an idea of the future performance of the organisation. To analyse the financials of a company, investors consider its revenue, profitability, cash flow, and debt. However, you can also consider other indicators, such as the price-to-equity ratio, analyst ratings, earnings per share, etc., to identify the fundamentally strongest and best oil and gas stocks in India.
• Emerging or Upcoming Trends: Get an overview of the emerging trends related to the industry to make future predictions relevant to oil and gas stocks. For example, the integration of AI and ML will foster the use of autonomous robots. It will impact employability in the oil and gas industry and may also impact oil and gas stocks differently. Also, the equity value of such companies was crushed between 2014 and 2020, encompassing retirements in the industry. Learn about such trends to make informed investment decisions and diversify your portfolio.
• Regulatory Environment: Rules, regulations, and government policies are crucial for impacting oil and gas stocks in India. Consider the subsidies, taxes, and amendments in energy laws as the key factors that can affect your potential investment. For example, recently, the government has approved a new pricing scheme for natural gas to align domestic prices with global ones. It will now impact the best oil and gas stocks in India. Beware of such changes in the regulatory framework to analyse the impact on time and make alterations to the investment.

Upcoming Trends For the Renewed Indian Oil and Gas Sector

India has set a target of increasing its natural gas share in the energy mix from 6.7% to 15% by the end of 2030. It is one of the fastest-growing energy markets in the world. In this section, we’ve mentioned some emerging trends that tend to boost the oil and gas industry.

1. Hydraulic Fracturing

A technique called hydraulic fracturing will be used to fracture rock and create new cracks using pressurised fluid. Most organisations operating in this industry are facing issues related to water requirements, which are impacting oil and gas stocks in India. However, with the help of hydraulic fracturing, carbon nanotubes, and microbiology, this problem might be solved, and stock prices may eventually rise.

2. Microbial-Enhanced Oil Recovery (MEOR)

MEOR is the procedure in which microbes with nutrients are injected into reservoirs to enhance the physiochemical properties of crude oil. This will improve reservoir conditions and oil production. With the help of hydrocarbon-eating microbes, we will be able to decommission old facilities. It might encourage the renewed practice of recovering oil operations efficiently.

3. IoT (Internet of Things) and Autonomous Rigs

Advanced technology will be used. IoT would be implemented to automate the field and operate oil wells. This will surely encourage dark warehousing, a process in which robots will be used to manage inventory, pick up, and ship material with low human intervention. Moreover, autonomous rigs will help us drill the well. It will move across the landscape and is expected to drastically change India’s oil and gas industry.

Challenges Investors Can Face in Oil and Gas Sector Stocks

Stock market investment is an excellent choice to build wealth, but it comes with difficulties and challenges. Let’s look at the significant challenges faced by investors when investing in the best oil and gas stocks in India.

1. Market Volatility

Dynamic market sentiments often impact stocks of a specific industry or company. For example, on 4th June, everyone was expecting that Prime Minister Shri Narendra Modi’s victory would bring a huge upside movement in the market. However, Nifty and Sensex declined up to 6%. Such unexpected market volatility might impact the investors of the best oil and gas stocks in India.

2. Environmental Considerations

The ecological impact of fossil fuels is another challenge for investors in oil and gas stocks in India. Stakeholders are continuously pressurising oil and gas companies to reduce their carbon footprints, making it challenging for oil companies to maintain profitability while reducing their carbon footprints.

3. Change in Prices

Recently, oil prices rose by 2% during the OPEC meeting, resulting in the downfall of oil and stock prices. This was an unexpected change for most investors who have a portfolio of oil and gas stocks in India. Beware of such changes in oil and petroleum product prices to analyse their impact on stock prices.

Who Should Invest in the Best Oil and Gas Stocks in India?

Today, stock investment has become popular in India. Most investors are showing keen interest in the oil and gas industry as they know it has the potential to generate higher returns. It has been analysed that the best oil and gas stocks in India offer the potential for steady growth and income. However, we are all aware of certain risks in the stock market. So, here is an exploration of who can be a potential investor in oil and gas stocks.

1. Dividend Expectant

 Dividends can be a regular income for investors. They are not part of stock returns. If an individual seeks stocks to earn higher dividend amounts, oil and gas stocks in India could be a perfect fit. These stocks have perfect cash flows, which makes them better for income generation in the stock market.

2. Portfolio Diversifiers

A diversified portfolio is nothing but a strategy to reduce the risk by varying the types of stocks you invest in. We all know that stocks perform differently over time. And being a portfolio diverser could be a good choice for an investor. Best oil and gas stocks in India ensure portfolio diversification, especially when combined with industries such as technology, finance, FMCG, healthcare, etc.

3. Long-Term Investors

Investors with long-term horizons are the smart players in the stock market. Oil and gas companies have a history of generating high returns over extended periods. As a long-term investor, one can invest in oil and gas stocks in India and benefit from steady domestic and global energy consumption.

Bottom Line

As income levels and the population witness rising trends, needs for oil and gas products rapidly grow. The best oil and gas stocks in India are increasing because the government aims to reach net zero emissions by the year 2070. The number of oil stocks has already jumped over 50% to 70% in the past year. Plan your investment in oil and gas stocks in India with proper research on industry trends. Open a free online demat account with Univest to invest simply in oil and gas stocks in India. Despite this, you can also trade in shares, IPO commodities, and F&O with Univest’s stock advisory services.

Frequently Asked Questions

1. What are oil and gas stocks?

Ans. Oil and gas stocks in India are the shares of business enterprises that produce, explore, and distribute oil and gas products. Despite being the third largest consumer of such products in the world, India still has constant demand for such products. The best oil and gas stocks in India include Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., Reliance Industries, ONGC, and more.

2. Is investing in oil and gas stocks worth it?

Ans. As per the analysts’ ratings, oil and gas companies are currently undervalued. We can anticipate the long-term potential returns in the upcoming years. However, we suggest you conduct thorough research or consult a financial advisor to make informed investment decisions to build your diversified portfolio. 

3. What are the best oil and gas stocks in India?

Ans. Based on current market sentiments, here are the four best oil company shares to buy at the end of 2024. 

1. Reliance Industries Ltd.
2. Oil and Natural Gas Corporation Ltd. (ONGC)
3. Indian Oil Corporation Ltd.
4. Petronet LNG Ltd.

4. What factors should be considered when investing in oil and gas stocks?

Ans. When investing in oil and gas stocks in India, investors must consider factors such as the regulatory environment, price of oil products, emerging/upcoming trends, fundamentals/financials, etc. These factors could give investors an overview of sentiments and future performance of the stocks.

5. Is there any penny stock in oil and petroleum?

Ans. Yes, Sri Havisha Hospitality and Infrastructure Ltd. is one of the penny shares in petroleum operations. This stock is currently trading at INR 2.85 (on 7th November 2024) with an upside movement of 1.42% in a day. The 52-week high of this stock is INR 3.65, and the 52-week low is INR 1.70.

6. What are the different types of oil and gas stocks in India?

Ans. Oil and gas stocks are divided into different categories. Here are they.

1. Upstream Stocks: These are the shares of companies involved in finding and extracting useful resources from the ground. Exploration and production of petroleum products are the two primary operations of such companies. Oil and Natural Gas Corporation Ltd. (ONGC) is an example of upstream oil stocks.
2. Midstream Stocks: These are the shares of companies that transport and store oil and natural gas. For example, Bharat Oil and Waste Management Ltd. is a key player in operating pipelines, terminals, and storage facilities to move extracted resources from production to customers/refineries.
3. Downstream Stocks: When it comes to refining and marketing oil and gas products, these oil and gas stocks come into the picture. They refine crude oil from upstream companies to make usable products such as diesel, gasoline, and more. Indian Oil Corporation Ltd. is a downstream company operating in the oil and gas sector.

7. What is high-speed diesel?

Ans. High-Speed Diesel (HSD) is the hydrocarbon oil, excluding mineral colza oil and turpentine substitute, that undergoes the distillation of crude oil to meet the requirements of the Bureau of Indian Standards Specification No IS-1460. For further information, please refer to BIS specifications.

8. Which is the largest oil and gas company in India?

Ans. Oil and Natural Gas Corporation (ONGC), with a market capitalisation of INR 3,36,000 crores, is the biggest player in India’s oil and gas industry. This organisation handles around 70% of the country’s crude oil production. The CMP (Current Market Price) of this one of the best oil and gas stocks in India is INR 2656.40.