Nayara Energy\'s Silent Rise: India\'s Most Underrated Oil-to-Energy ... Nayara Energy\'s Silent Rise: India\'s Most Underrated Oil-to-Energy Play Read more

India’s energy sector is at a turning point — global volatility, domestic demand, and a shift towards cleaner fuels are reshaping the landscape. Amid this, Nayara Energy is building a formidable position.

Formerly known as Essar Oil, Nayara may not be a household name, but its petrol stations are becoming a common sight across India. Backed by strong refining capabilities and a focused growth strategy, the company is making steady progress in a highly competitive sector.

Company Overview

• Refining: Nayara operates India’s second-largest single-site refinery at Vadinar, Gujarat, with a capacity of 20 MMTPA.

• Retail Footprint: The company has over 6,500 fuel stations, with a goal of reaching 10,000 outlets by 2030.

• Diversified Operations: Beyond refining and retail, Nayara is expanding into petrochemicals, ethanol, and green energy, while also growing its international trading operations through Singapore.

Sector Context

India imports over 85% of its crude oil needs. As global supply chains face pressure from geopolitical events, Indian refiners are under constant pressure to manage costs and efficiency. While PSUs dominate, private players like Nayara are gaining ground by focusing on flexibility, retail reach, and cleaner fuels.

With fuel demand remaining strong, the companies that can adapt, invest, and execute efficiently are well-positioned to lead.

Strategic Priorities

Expanding Fuel Retail

Nayara’s retail ambitions are clear — reaching 10,000 outlets by 2030. The company added 400 new fuel stations in FY25 and continues to open outlets daily. This retail expansion strengthens brand visibility and ensures better distribution margins.

Focus on Ethanol & Clean Fuels

Ethanol production plants are being developed in Andhra Pradesh and Madhya Pradesh, with a target of five operational plants by 2030. This aligns with the government’s biofuel blending goals and gives Nayara a cleaner energy footprint.

Global Trade Expansion

Through its Singapore operations, Nayara is boosting its international oil trading capability. This supports a more integrated and agile supply chain — important for navigating global crude markets.

Modernising Fuel Stations

Nayara is reimagining its fuel stations as multi-service centres. New outlets are being equipped with:

• EV charging infrastructure

• CNG pumps

• Lube and tyre services

• Digital chatbot assistance

• Basic citizen service centres

This approach reflects a shift from pure fuel retail to a more diversified, customer-centric model — ready for the future of mobility.

Financial Performance

Between FY21 and FY24, Nayara’s revenue grew at a 21% CAGR — a solid pace for a refining business. Key financial highlights:

• FY24 Revenue: ₹1.56 lakh crore

• PAT: ₹12,321 crore

• PAT Margin: 8% (vs. industry avg ~2%)

• EBITDA Margin: 13%

• ROE: 28%

• ROCE: 30%

• Debt-to-Equity: 0.27

• EPS Growth: From ₹3 in FY21 to ~₹83 in FY24

Looking ahead, Nayara is targeting ₹3.36 lakh crore in revenue by FY28, with stable profitability and strong capital returns. The company has shown an ability to scale without sacrificing margin or balance sheet discipline.

Rosneft’s Exit: A Defining Moment

One of the most significant developments is the potential exit of Rosneft, which holds 49.13% in Nayara. The move is reportedly linked to the geopolitical complications post the Russia-Ukraine war, including challenges around dividend repatriation and capital movement.

Reports suggest that Indian conglomerates — Adani, Reliance, JSW, and Vedanta — have initiated preliminary talks with Rosneft. If a domestic player steps in, it could unlock several benefits:

• Improved governance and transparency

• Relief from sanction-related complexities

• Easier access to capital and funding

• Potential for IPO, strategic exit, or buyback

While the final buyer remains unconfirmed and near-term volatility is possible, a successful stake transfer could pave the way for a more independent and agile Nayara.

Peer Comparison

Despite being unlisted, Nayara outperforms on profitability, margins, returns, and leverage. The low P/E may reflect liquidity limitations — or a possible market disconnect with its underlying performance.

Final Take: Is Nayara Worth Watching?

Nayara Energy isn’t just another refining company. It’s a profitable, forward-focused business with strong fundamentals, a growing presence in clean energy, and a clear expansion roadmap.

Key strengths:

• Rapid retail growth

• Superior profitability and returns

• Strategic push into ethanol and green fuels

• Efficient balance sheet

• Upcoming shareholder reshuffle that could unlock value

Risks to watch:

• Rosneft stake uncertainty

• Near-term debt obligations (~₹2,000 crore)

• IPO timeline remains unclear

• Unlisted market liquidity

Conclusion

If you're looking for a high-quality energy business with both scale and growth potential, Nayara Energy is worth a close look. While short-term challenges exist, its strong operating performance and strategic direction suggest that it’s preparing for something much bigger.

The stock is currently available in the unlisted market through platforms like Sharescart.com. For those who invest with a long-term lens, Nayara could be a compelling portfolio addition.