ONGC Q2 Results Review - Healthy Realisation, Production Growth Augurs Well: Prabhudas Lilladher

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Prabhudas Lilladher Report

We increase our FY23-25E earnings by 6-43% to factor in higher crude oil realisation to $81/73/barrel of oil ($73/70/bbl earlier).

Oil and Natural Gas Corporation Ltd.’s Q2 standalone Ebitda was lower than expected at Rs 188.1 billion (down 27.5% QoQ; our estimate Rs 201.7 billion), while profit after tax of Rs 128.3 billion (down 15.7% QoQ our estimate Rs 107.5 billion).

Ebitda was hit by lower than expected oil and gas volumes while profit after tax got a boost from higher other income and lower tax of 9% as company migrated to lower tax regime.

Q2 consolidated Ebitda/profit after tax stood at Rs 165.7 billion (down 17% QoQ) and Rs 68.4 billion (down 26% QoQ) due to losses at Hindustan Petroleum Corporation Ltd.

Recent government decision to impose windfall taxes will mean ONGC’s crude oil realisation will be ~$73/ bbl, thereby not benefiting from high commodity prices but gas prices will remain healthy.

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