Oil And Natural Gas Corporation Ltd. share price forecast
The 17 reports from 8 analysts offering long term price targets
for Oil And Natural Gas Corporation Ltd. have an average target of 106.57. The consensus estimate
represents a downside of -14.47%
from the last price of 124.60.
Improving realisation and rising production to support gas producers:We expect domestic gas price to have bottomed in 2HFY21 at USD 1.79/mmbtu and increase gradually to USD 2.6/mmbtu in 2HFY22 with the increase in global gas prices. Increasing gas prices and rising Brent crude oil price (already at USD 67/bbl in March 2021 up by 50% over 3QFY21) should aid earnings CAGR of 9-14% over FY21FY23E for ONGC and OIL. ONGC should also benefit from increase in gas production by up to 12mmscmd over FY2125E as production from its KG basin blocks ramp up. We upgrade ONGC and OIL to a BUY from REDUCE. On FY23E PER, ONGC trades at 6.7x and OIL at 3.7x. A reduction in spot LNG price, strong demand growth, and a sharp increase in domestic gas supply should drive gas utilities earnings growth and valuations. We expect the fall in spot LNG price by 80% from the recent peak in Feb 2021 to USD 6.6/mmbtu for May delivery to boost demand growth. We expect 12% CAGR in Indian natural gas demand over FY2123E to drive earnings growth of up to 25% CAGR (FY21FY23E). Further, it should lead to stock price upside potential of over 21-27% for our top picks GAIL, GSPL, and GGL. On FY23E, GAIL, GSPL and GGL are trading at a PER of 6.4-17.8x. By FY22E, operating cash flows should improve by up to 72% YoY, and FCF yield should increase up to 484bps YoY for these three companies.
JMC Projects: JMC Projects (JMC) reported in-line revenue at Rs 10.7bn (+15%/+32% YoY/QoQ). However, EBITDA/APAT missed our estimate by 20%/41% as the additional cost related to labour transportation and higher commodity prices impacted margin. YTD order inflow stood at Rs 75bn, taking the order book to Rs 142bn (ex. L1 of Rs 7.5bn). We remain constructive on JMC, given (1) a healthy order book (~4x FY20 revenue) and (2) comfortable balance sheet. We reiterate BUY with an unchanged target price of Rs 110. We have cut our FY21 estimate to incorporate the miss on margin in 3QFY21. Key risks: (1) delay in restructuring/monetisation of BOT assets and (2) increase in leverage. ITD Cementation: While ITD saw robust execution (Rs 7.9bn, +12%/+43% YoY/QoQ, 13% beat), margins have still not normalised to pre-COVID levels (9%, -9/+922 bps YoY/QoQ, vs 10.8% HSIE est.). Labour availability has fully normalised. Order backlog is robust at Rs 130bn (4.5x FY20 revenue), aided by FYTD21 order wins of Rs ~40bn. Although consolidated net debt (Rs 4.4bn vs Rs 3.4bn at 2QFY21) has increased QoQ, the balance sheet remains robust at 0.4x net D/E, as cash utilisation has gone up. We maintain BUY on ITD with an unchanged target price of Rs 106/sh, (1) given large order book (~4.5x FY20 revenue), (2) strong balance sheet and (3) supportive valuation (6.1x FY23E EPS). No change in our financial estimates. ONGC: Our REDUCE recommendation on ONGC with a price target of INR 101 is premised on (1) muted crude oil and gas realisations and (2) lack...
ONGC Q3 Sales down 8%, NP down 47%, misses estimates ONGC reported 8% decrease in its topline to Rs 100288.83 crore in Q3FY21 compared to corresponding previous year period. OPM fell to 11.2% from 14.3% leading to 28% fall in operating profit to Rs 11279.36 crore. Other income of the company rose 21% to Rs 2127.68 crore. Interest cost fell 33% to Rs 1025.2 crore. Depreciation (includes Depletion, Amortization and impairment losses) cost decreased 13% to Rs 6494.8 crore. PBT was down 30% Rs 5887.4 crore. Tax expenses were down 48% to Rs 2012.02 crore. Net profit reported was down 14% to Rs 3875.02 crore. Further considering MI and share of profit...
We increase our earnings estimates for FY21E to factor rise in global crude oil prices given production cuts by OPEC countries and similarly for FY22/23 to factor in lower cost. Global crude oil and gas prices will likely remain weak given uncertain demand environment plus new supplies may come in Mar-21 when production cuts get reviewed; accordingly, we factor in USD45/55/bbl...
While crude oil prices are witnessing sequential improvements, supported by volume growth from Hazira plant and KG98/2 project in long-run. Hence we upgrade our rating to BUY on the stock with revised target price of Rs. 86 using SOTP valuation....
operating profit to Rs 8839.29 crore. Other income of the company fell 30% to Rs 1079.41 crore. Interest cost fell 1% to Rs 1497.66 crore. Depreciation (includes Depletion, Amortization and impairment losses) cost increased 2% to Rs 5847.94 crore. PBT was down 77% Rs 2573.1 crore. Tax expenses were down 79% to Rs 922.19 crore. Net...
2 September 2020 Net oil realization stood at USD28.7/bbl (v/s est. Net sales were in line at INR130b (-51% YoY). EBITDA stood at INR59b (v/s est. +26%, -61% YoY), on lower other expenditure. This was primarily due to lower travelling/employee cost, lower statutory levies and cess, and lower feedstock gas prices at Dahej petchem plant. ONGC believes that DD&A; may remain at the same levels but other costs may decline significantly, led by various cost cutting measures. Tax was higher at 45.1% (v/s est. 33.3%), due to further provisioning of Service Tax/GST on Royalty as contingent liability. The matter is listed for hearing in the second week of Sep20 before the Honorable High Court of Rajasthan.
Crude oil prices stayed volatile in Q1FY21. Brent crude oil prices fell up to ~US$17/bbl while WTI oil prices traded in the negative for the first time in April. With demand increasing following a resumption of economic activities & Opec output cuts, Brent oil prices recovered in May, June. Average Brent crude oil prices remained lower at US$31.4/bbl, a decline of US$19.2/bbl QoQ. In Q2FY21E, oil prices are in range of US$45/bbl. Going ahead, we model net realisation of US$39.4/bbl for FY21E, US$48.5/bbl for FY22E at Brent oil prices of US$41/bbl, US$ 50/bbl, respectively, taking into account...
Upstream players: We expect a sharp 34-36% QoQ decline in revenue for ONGC and OIL respectively, led by lower (1) crude realisations at INR 2,393/bbl, down 48/33% YoY/QoQ, (2) prices of VAPs, (3) 26% cut in domestic gas price realisation. Revenue for our coverage universe is likely to decline by ~50/45% YoY/QoQ owing to the lockdown and sharp correction in crude oil and gas prices. This has resulted in a decline in sales for OMCs, RIL, GAIL and CGD entities and lower realisation for upstream companies. We expect EBITDA for oil and gas companies under our coverage to decline by 30% YoY in 1Q owing to lower refining margins and per unit EBITDA margins for CGD companies.
ONGC reported 7% decrease in its topline to Rs 104488.95 crore in Q4FY20 compared to corresponding previous year period. OPM fell to 3.5% from 15.6% leading to 79% fall in operating profit to Rs 3638.66 crore. Other income of the company rose 39% to Rs 3525.37 crore. Interest cost rose 52% to Rs 2191.34 crore. Depreciation (includes Depletion, Amortization and impairment losses) cost increased 8% to Rs 6771.78 crore. PBT before EO reported loss of Rs 1799.09 crore compared to profit of Rs 12370.11 crore. The...
ONGC's Q4FY20 result was impacted negatively by higher impairment losses (Rs 49bn), higher forex loss (Rs11.1 bn) and higher dry-well write off (Rs26.4 bn). Revenue was down 20% YoY to Rs 214.6bn on the back of 20% YoY lower crude oil realization at US$50.5/bbl. Oil sales volume declined by 7.3% YoY to 5.4mmt whereas gas sales volume declined 10.6% YoY to 4.7bcm. Further, standalone EBITDA declined by 37% YoY to Rs5 bn due to higher forex losses of Rs11.1bn. The company reported net loss of Rs31 bn while adjusted PAT declined 83% YoY to Rs7.1 bn. We forecast oil price of US$40/50/bbl for FY21/FY22 while oil and gas production decline of 2% for FY21 and 1% growth in FY22. We resume our coverage...
Our TP is INR 86 (8x EV/e Sep-21E standalone earnings and INR 25 from investments).The stock is currently trading at 2.4x FY22 EV/e. Our ADD recommendation on ONGC with a TP of INR 86 is premised on rich OCF yield of 6/35% and divided yield of 14% for FY21/22E. We believe the current valuations are contextually low after adjusting for investments (OVL+ other) at 4.0x FY22 PER
30 June 2020 Standalone revenue of INR214.6b (-20% YoY, -10% QoQ) was marginally higher than our estimate. The YoY decline was primarily due to lower oil price realization (at USD49/bbl in 4QFY20). However, EBITDA came in lower than estimate at INR85.9b (~-30% YoY/QoQ), impacted by higher other expenditure. ONGC recorded INR11.1b on account of exchange loss and INR3.7b on account of Ind-AS 116 related adjustment. If adjusted for the above stated two charges, EBITDA stands at INR101b (in line v/s est. DDA stood at INR80.4b (v/s est. Higher DDA and lower other income resulted in PBT of INR10.1b (lower ~82% YoY/QoQ).
Opec+ output cut deal not enough; oversupply to continue From the start of 2020, Brent oil prices have declined ~60% while WTI oil prices went below zero. In March, a disagreement between Opec and Russia regarding production cut led to a price war in the global market. This led Brent oil prices to drop to ~US$30/bbl. In April, finally Opec+ announced a deal to reduce oil output by 9.7 million barrels per day (mbpd). As per IEA, global oil demand could drop by ~23 mbpd in Q1FY21E amid spread of Covid-19, which meant that even if a 9.7 mbpd output cut takes place in May,...
Crude prices witnessed a sharp decline in March due to spread of Covid-19 across the globe and Opec deal failure. A likely increase in oil output by both Saudi Arabia and Russia from Q1FY21E and lower demand are expected to lead to a sizeable oversupply in the oil market. Subsequent low oil prices are expected to significantly affect ONGC's profitability....
