The oil and gas industry is crucial to the global economy, providing the energy that powers transportation, supports industries, and creates the materials used in everyday products. It begins with crude oil, a natural resource extracted from deep beneath the Earth’s surface. However, crude oil itself cannot be used directly—it must go through a refining process to be transformed into useful products.
Refining is the process that converts crude oil into a range of valuable goods, such as petrol, diesel, cooking gas, and raw materials for plastics, chemicals, and more. This transformation is vital for powering vehicles, generating energy, and producing the materials that drive industries and support modern life, from packaging to construction. For those looking into energy sector investments, Nayara Energy Unlisted Share offers a compelling case.
Nayara Energy offers a prime example of how refiners align their operations to meet the diverse needs of the oil and gas industry. The company handles every step of the process, from buying crude oil to refining, distributing, and selling products. Their refineries are designed to process various types of crude oil and turn it into a wide range of products for both local and global markets, such as:
Petrol:Here’s something exciting: the petrol we use every day is getting a major green upgrade! Petrol is typically made from crude oil, but there's a greener, more sustainable way to produce it. By blending ethanol, a type of alcohol made from plants, into petrol, we not only make fuel more affordable but also help reduce pollution. This is part of their initiative to support India’s renewable energy goals and lower our reliance on fossil fuels. In FY 2024, they introduced ethanol-blended petrol options like E12 and E20, which contain 12% and 20% ethanol, respectively. Ethanol is cheaper than regular petrol, so it's a win-win situation for both the environment and your wallet.
Diesel:Next up, we have diesel, which powers everything from trucks to heavy machinery. Nayara makes two main types of diesel, one which is used in large engines like those in trucks, and a lighter version, used in smaller engines, such as those in smaller vehicles or machines.
Nowadays, the light diesel oil is becoming more popular for a few reasons. It’s cheaper to produce, burns cleaner, and is more productive for smaller engines. Because of these benefits, their share grew from 9% to 12% in a single year. It’s especially important for industries like farming, transportation, and construction, making sure operations run smoothly and cost-effectively.
Aviation Turbine Fuel (ATF):When you board a plane, the fuel powering your flight is called Aviation Turbine Fuel. It's a special type of fuel that is specifically designed for aircraft engines. Nayara has optimized its production to ensure that the highest-quality ATF is available. In FY 2024, the company achieved record levels of aviation fuel output, ensuring that more flights are powered efficiently and safely.
Industrial and Household Products
Liquefied Petroleum Gas (LPG):LPG is the cooking gas that is used in many homes across India. It's not just for cooking; it’s also important for other industries, like car manufacturing, medicine, and making chemicals. LPG is popular because it gives a lot of energy and is better for the environment compared to other fuels. It’s also used in factories to run big machines and equipment like boilers and furnaces.
Ethane and Naphtha:
Naphtha is a by-product of refining oil and is important for making chemicals. However, Nayara has shifted focus to more profitable products by using natural gas to produce materials like plastics, adhesives, and rubber. This approach helps the company create valuable products and generate higher profits. Earlier this year in 2025, Nayara announced plans to invest ₹68,000 crore in a new plant in Gujarat to meet the growing demand for these petrochemical products.
Bitumen:If you’ve ever driven on a freshly paved road, chances are, you’ve crossed paths with bitumen. This sticky substance is used to build and maintain roads; whether it's highways or local pathways, bitumen is critical for building the infrastructure needed to connect people and businesses across the country. The company optimizes its production of bitumen to meet the growing infrastructure needs in India.
Mineral Turpentine Oil:Mineral turpentine oil is a solvent used in things like paints, varnishes, and even as a cleaning agent. It’s also used in industrial applications. The market share grew to 12% in FY 2024, proving that the company is making a big mark in this niche market. This growth comes from providing high-quality products that industries rely on to keep their operations running smoothly.
Petcoke and Sulphur:Petcoke is a carbon-rich by-product of the refining process, typically used as a fuel for power generation and in cement manufacturing. Sulfur, another by-product, is crucial for producing the acid, which is used in industries like fertilizer production and car battery manufacturing. Rather than letting these substances go to waste, they are focusing on maximizing the value, turning them into profitable, essential products that are in demand across multiple sectors.
In 2024, the company launched its high-capacity specialized plant, marking its first major entry into the world of plastics. Polypropylene is one of the most widely used plastics in the world, found in everything from packaging and textiles to automotive parts.
And it doesn’t stop there! The company is already planning phase 2 of its petrochemical project, which will include a steam cracker unit. To put it simply, this will add a unit that breaks down raw materials to produce important components for plastics and chemicals. When complete, the company aims to capture 8% of India’s polypropylene market, benefiting from its location in a key industrial region in western India.
Nayara Energy’s main operation is its large refinery in Vadinar, Gujarat, which is the biggest single-location refinery in India. It has a capacity of 20 million metric tonnes each year and handles about 8% of India’s total refining.
The refinery is designed to be very efficient, meaning it can process different types of crude oil and turn them into valuable products. The higher its efficiency score, the better it can process cheaper, heavier oils into valuable products.
In FY 2024, the refinery operated at 101.6% of its planned capacity, meaning it operated beyond the full capacity.
Nayara’s institutional business has also been expanding, with the company increasing its market share in this segment from 6% to 9%, which focuses on selling to large institutional clients such as industries, bulk buyers, and other commercial entities, shows that they are diversifying their customer base beyond just retail sales, reducing their dependence on any single segment.
The company has a wide range of products designed for various industrial uses, from construction to energy generation. These offerings allow them to cater to different sectors, and they aren’t putting all their eggs in one basket!
When it comes to financial performance in FY 2024, the company saw a 12% increase in its revenue, bringing it to around ₹1,54,600 crores, primarily driven by higher production volumes and increasing market share in both domestic and international markets.
The net profit, which saw a 26% year-on-year increase, reached ₹12,085 crores, and the Gross Refining Margin (GRM), which measures the difference between the cost of crude oil and the revenue from selling refined products, was healthy as well.
Tailwinds (Positive Factors)
Advanced Refining Capabilities: Nayara Energy runs a highly advanced refinery with special equipment that can handle many types of crude oil, even the heavier and cheaper ones. This ability helps them make high-quality products at a lower cost compared to simpler refineries. Simply put, their advanced setup means they can earn more profit by processing a wider range of crude oils.
Supportive Government Policies: The Indian government is helping the oil and gas sector grow by allowing companies from other countries to invest money in Indian businesses without much hassle. This means foreign companies can partner with or support businesses like Nayara Energy, bringing in more money and opportunities. The government is also working to increase the country’s ability to handle and store natural gas, which opens up new chances for Nayara to grow, either by creating partnerships or producing more gas-based products.
Strategic Location: With a refinery located in Western India, the country’s largest region for petrochemical consumption, this location allows easy access to key markets and ensures lower transportation costs. On top of that, the refinery has its own port which means they can bring in the raw materials they need (like crude oil) directly and send out the finished products (like petrol and diesel) to other places without relying on others. This setup saves money, speeds up their work, and helps them do business better, both within India and with other countries.
Use of Hedging, which is like an insurance for crude oil and refined products. It helps the company deal with price changes by locking in prices using special financial tools. This way, even if prices go up or down suddenly, the company can keep its profits more stable, even during uncertain market conditions.
Expanding Retail Business: Nayara is growing its retail network with over 5,000 branded outlets. This expansion directly sells products to consumers, increasing revenue and market presence. In addition, they are diversifying into non-fuel retail services with services like food and auto-related products, enhancing customer loyalty and creating new revenue streams.
Impact of Rosneft Sanctions: One of their major stakeholders is Rosneft, a Russian oil company that has repeatedly been under economic sanctions due to the Russia-Ukraine conflicts. Although the sanctions have not yet affected their operations, they pose a risk to future investments, and trade relationships.
Industry Competition: The oil and retail fuel industry in India is highly competitive, with public sector companies controlling around 90% of retail outlets. This gives government-backed companies a competitive edge, particularly in pricing and market reach. As a result, they face difficulty in expanding their market share, especially in the highly competitive retail sector.
Volatility in Refining Margins: While they enjoy strong refining margins, these margins are not guaranteed and can fluctuate due to changes in crude oil prices and global demand-supply conditions. If these margins fall, it could negatively impact profits, despite its strong operational capabilities.
Exposure to Currency Risk: Most of their crude oil is imported, and these purchases are in US dollars. As a result, they are exposed to the risk of the Indian Rupee fluctuation against the US dollar.
Competitive Positioning and Peer Analysis
Nayara Energy currently trades at [View Nayara Energy Unlisted Share Price] standing out in the oil and gas industry through its efficient operations, diversified business areas, and focus on innovation. With a growing retail presence, cost efficiency, and diverse investments, the company is set for growth.
For a company in the energy sector, where heavy capital investments are often required for expansion and infrastructure, a moderate debt-to-equity ratio is ideal. Nayara has a manageable level of debt relative to its equity, reducing the financial risk and ensuring the company can withstand market fluctuations while continuing to invest in strategic projects like refining and petrochemical expansion.
Sector: Refineries
Despite all the positives and a strong foothold in the oil refinery sector, the Nayara Energy share price faces many headwinds, such as fluctuations in crude oil prices, which can directly impact profitability and margins. Geopolitical tensions and regulatory changes also add pressure. To mitigate these risks, the company has built a margin of safety by implementing hedging strategies to protect against price volatility. Additionally, Nayara Energy focuses on enhancing the safety of human capital, continues its diversification and scalability efforts to reduce exposure to any single segment, and emphasizes high-value-added products and operational efficiency—key drivers for sustained growth.
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