What should investors do with oil and gas stocks? Reliance Industries, MGL, IGL and others | Target prices, Q4 preview

Systematix Institutional Equities expects pressure on margins across parts of the oil and gas space in the March 2026 quarter (Q4 FY26), as rising input costs and supply disruptions weigh on city gas distribution (CGD) companies, even as select firms continue to show resilient growth.

With Brent crude rising 24.2 per cent sequentially, spot LNG averaging at $13.2/mmbtu (vs $10.9/mmbtu in Q3FY26), Henry Hub (HH) prices remaining elevated at $4.9/mmbtu and the Indian rupee depreciating 2.8 per cent quarter-on-quarter (QoQ), the brokerage believes CGD players are likely to witness margin compression due to sharp increase in input costs, amid geopolitical tensions in West Asia.

Among large-cap names, Reliance Industries Ltd (RIL) is expected to report stable performance. The brokerage estimates consolidated revenue and EBITDA to grow around 8 per cent and 8.5 per cent year-on-year (YoY) to Rs 2,82,200 crore and Rs 47,600 crore, respectively, supported by strong traction in digital and retail businesses. EBITDA from the digital and retail segments is seen rising 13.9 per cent and 3.6 per cent YoY, respectively. However, the oil and gas segment may see a 5.5 per cent YoY decline in EBITDA due to a 4.6 per cent drop in production from the KG-D6 block.

For CGD players, Systematix estimates Mahanagar Gas Ltd (MGL) to post around 6.6 per cent YoY growth, while Gujarat Gas Ltd and Indraprastha Gas Ltd (IGL) are likely to report earnings decline of 17 per cent and 1.7 per cent YoY, respectively.

On Petronet LNG Ltd (PLNG), the brokerage noted that volumes are expected to decline 4.5 per cent YoY and 16 per cent QoQ, mainly due to lower utilisation at the Dahej terminal (around 78 per cent). "The quarter was particularly weak in March'26, impacted by supply disruptions (force majeure) from RasGas and a sharp rise in spot LNG prices (~21.7 per cent). However, potential inventory and trading gains could partially support earnings," it said.

GAIL (India) Ltd may also see muted performance in the quarter. "GAIL's YoY performance is expected to remain subdued on lower gas transmission (-6.7 per cent YoY/-12.1 per cent QoQ) and trading performance amid supply disruptions. This, coupled with muted performance across other segments, is expected to weigh on overall earnings," the brokerage mentioned.

Among other companies under coverage, Systematix expects Gulf Oil Lubricants India Ltd to report total volumes of 79.6 million litres, up 4 per cent YoY and 1.4 per cent QoQ. Core and AdBlue volumes are projected to grow 5 per cent and 3 per cent YoY, respectively, but may see a marginal sequential decline of around 0.1 per cent and 3 per cent QoQ due to weaker transportation demand amid lower industrial activity.

For Deep Industries Ltd, the brokerage anticipates a 31 per cent YoY rise in revenue driven by higher contribution from new assets and business segments. EBITDA and profit after tax (PAT) are expected to grow 81 per cent and 61 per cent YoY to Rs 100 crore and Rs 67.3 crore, respectively.

Systematix has assigned 'Buy' ratings on RIL, Deep Industries, Gulf Oil Lubricants, MGL, IGL and Petronet LNG, with target prices of Rs 1,700, Rs 693, Rs 1,660, Rs 1,374, Rs 226 and Rs 342, respectively. The brokerage has given 'Hold' ratings on Gujarat Gas and GAIL, with target prices of Rs 447 and Rs 176, respectively.