What Rising Crude Means for Indian Markets + 5 Stocks to Track

Positively Impacted

These are the upstream oil firms.

The earnings of these firms will be impacted positively by rising crude oil prices. For every US$ 5/bbl move in Brent crude, the corresponding hit to the earnings per share (EPS) is around 8-10%.

Even so, these companies aren't just clinging on hope of oil prices recovering. They are leaning into production growth, exploration and energy transition bets.

For investors, the key will be to watch how well these companies execute on their growth plans, manage costs, and adapt to shifting market dynamics.

By staying selective and focused, investors can tap into the long-term potential of these energy players while keeping an eye on the inherent risks of the commodity cycle.

#1 ONGC

ONGC is the most obvious example of an Indian company benefiting from rising crude oil prices as it's India's largest oil and gas exploration and production company.

It's a dominant player in India's energy sector, contributing around 70-71% of the country's domestic crude oil production and about 84% of natural gas production.

The Maharatna PSU is vertically integrated across the entire oil and gas industry, involved in exploration, development, and production activities across basins in India.

As crude prices rise globally, ONGC can sell its crude oil at higher prices. This directly boosts its revenue and profit margins.

For every US$ 1 per barrel increase in crude prices, ONGC's annual revenue can increase by approximately Rs 3-4 billion (bn).

If the Israel-Iran conflict prolongs or escalates, crude oil prices are likely to remain elevated longer. This should benefit ONGC.

However, it should be noted here that the Indian government will, most likely, not let the domestic prices of various fuels rise too much. Thus, oil companies will have to share the burden if prices are capped, either directly or indirectly.

In such a scenario, the company's profitability could be affected.

ONGC Share Price - 1 Year

Recently, ONGC made promising new oil and gas discoveries in the Mumbai Offshore basin. This is expected to boost its production capacity.

ONGC also plans to double its natural gas production over the next 5-6 years, aligning with the Indian government's vision to increase the share of gas in the energy basket from 6.5% to 15%.

The company is expanding in the green energy sector too. It has set an ambitious target to build a renewable energy portfolio of 10 gigawatts (GW) by 2030.

To know more, check out ONGC fact sheet and latest quarterly results.

#2 Oil India Ltd (OIL)

Oil India is the country's second-largest national oil explorer, with deep roots in Assam and an expanding footprint across India's energy landscape. It plays a key role in India's energy security.

Financially, Oil India has delivered a 5-year revenue CAGR of 15.8% and net profit CAGR of 16.6% between FY20-24. Over the same period, its average ROE stood at 20.2% and ROCE at 17.8%, impressive for a company navigating declining fields and volatile crude prices.

Looking ahead, the north-eastern gas grid and new well gas pricing promise a step-up in volumes and margins. The company is also aggressively exploring high-potential areas like Barekuri and ramping up seismic surveys to bring new discoveries into production.

OIL India Share Price - 1 Year

As oil prices rise, Oil India's ramping output and disciplined capex of Rs 230 bn on the NRL and gas projects ensure it has plenty of fuel to keep the growth engine running.

Also, Oil India has broken new ground by striking oil in the north bank of the Brahmaputra for the first time in decades.

To know more, check out OIL's factsheet and latest quarterly results.

#3 Chennai Petroleum Corporation

Chennai Petroleum Corporation Ltd (CPCL) is one of India's leading refiners.

A subsidiary of Indian Oil Corporation and a crucial player in South India's fuel supply chain, the company is a key contributor to the nation's energy basket, with a refining capacity of 11.5 MMTPA.

Financially, Chennai Petroleum has delivered a 5-year revenue CAGR of 11.9%, with an average ROE of 29.4% (though skewed by exceptional years) and ROCE averaging 23% across FY20-FY24.

Rising crude prices could be positive for the company. However, FY25 was a challenging year for the company. Its gross refining margins (GRMs) halved to US$ 4.22/bbl from US$ 8.64/bbl last year, driven by weaker global product cracks.

Inventory losses and rising debt levels also weighed on profitability despite strong capacity utilisation.

Chennai Petroleum Share Price - 1 Year

Looking ahead, the Rs 363.5 bn Cauvery Basin Refinery project (in JV with IOC) will add 9 MMTPA of capacity, with a 6% petrochemical index, marking CPCL's entry into high-value petrochemicals.

The upcoming Lube Oil Base Stock (LOBS) project and ongoing debottlenecking upgrades will further lift margins, with expected annual capex of Rs 20-30 bn including major projects.

To know more, check out Chennai Petroleum factsheet and quarterly results.

Negatively Impacted

#1 Berger Paints

Berger Paints is the second-largest player in the Indian paint industry, after Asian Paints.

It makes decorative paints, industrial coatings, waterproofing products, and construction chemicals.

Berger Paints benefits when crude oil prices fall and vice versa because a large portion of the cost of raw materials used to manufacture paints-such as resins, solvents, and other petrochemical derivatives-are linked to the price of crude oil.

Berger Paints Share Price - 1 Year

When crude prices rise, the cost of these inputs generally rise as well. This reduces the company's margins. If the company does not immediately pass on these cost savings through lower paint prices, its profitability can be negatively impacted.

To know more, check out Berger Paints' factsheet and quarterly results.

#2 Indigo

Interglobe Aviation (Indigo) is India's leading private sector airline.

In the airline sector, with high crude-linked input costs, companies are typically among the first to be negatively hit due to sharp spikes in oil prices as higher fuel costs directly squeeze margins.

The sharp jump in crude has raised fears of higher input costs and renewed inflationary pressures.

Despite the negatively around the stock, the company plans to continue with its long-term fleet expansion strategy. This includes aligning pilot inflow and outflow with the airline's growing aircraft orders and long-term operational plans.

With a strong order book already in place, the airline is preparing to significantly expand its fleet and operations, targeting a plan to double in size by the end of the decade.

Indigo Share Price - 1 Year

At the same time, the airline is focusing on strengthening its international operations. While the business has historically been dominated by domestic and short-haul services, the planned expansion into Europe is expected to diversify its revenue mix.

International operations will generate revenues in foreign currencies, creating a natural hedge against currency fluctuations and reducing reliance on INR-based income streams.

To know more, check out IndiGo's fact sheet and quarterly results.

Conclusion

Crude oil stocks behave differently depending on their position within the value chain. Upstream producers gain when crude prices increase, as they can sell oil at higher prices.

For refiners, their performance is more closely tied to refining margins rather than just crude prices.

Oil marketing companies, paint companies, and airlines may face challenges if crude prices surge sharply and fuel prices remain unchanged.

Many businesses reliant on crude-based inputs can experience losses in such scenarios.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy investing.

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