ONGC’s 1QFY17 EBITDA was above estimates at INR92.7b (est INR82b; -23% YoY, +55% QoQ) led by lower opex at INR35b (-22% YoY, -27% QoQ) as service costs have reduced. PAT was further boosted to INR42b (est INR32b; -22% YoY, -4% QoQ) led by lower D,D&A of INR37b (est INR45b; -19% YoY, -10% QoQ), partly negated by interest cost at INR2.9b (v/s almost nil earlier).
The stock trades at 13.1x FY17E EPS of INR18.8 and 11.1x FY18E EPS of INR22.1. Implied dividend yield is at ~3-4%. Our DCF based fair value is at INR282. Buy.
Motilal Oswal