Oil And Natural Gas Corporation Ltd. share price target

ONGC's Q1FY20 result was a beat to our forecast on EBITDA front whereas Net Profit was in-line to our forecast. Revenue was down 2.4% YoY to Rs265 bn on the back of lower crude oil realizations and lower oil sales volume. Oil sales volume declined by 9% YoY to 5.3mmt whereas gas sales volume grew marginally by 2.1% YoY to 5bcm. Further, EBITDA grew by 2.6% YoY to Rs151bn whereas PAT declined 4% YoY to Rs59 bn. We maintain our forecast for FY20 and FY21. We believe that the Capital allocation uncertainty and lower crude oil...

ONGC's Q1FY20 earnings outperformed at Rs 59bn (4% YoY).

The quarter started on a pessimistic note for oil prices following news of easing of US sanction on Iran. However, production disruption from Venezuela and stricter sanctions once again on Iran led to an increase in oil prices. However, average Brent crude prices remained slightly lower at US$63.1/bbl in Q4FY19. ONGC stock price continues to fear subsidy for PSU upstream companies, following higher fiscal deficit last year. However, nil subsidy last year and the recent decline in oil prices makes us believe there would be nil subsidy on ONGC unless there is a sharp uptick in oil prices....

Crude oil production fell 4.9% in Q4FY19 to 5.9 MMT compared to Q4FY18. This includes 4.79 MMT from domestic operations and 0.749 MMT from JVs and 0.361 MMT of condensate. ONGC gas production rose 7.9% to 6.558 BCM in Q4FY'19. This includes 6.275 BCM from domestic...

Value pick; gas production ramp up to drive earnings ONGC's Q4FY19 EBITDA at Rs 124bn (+9% YoY) was in-line. However, earnings at Rs40.4 bn (-32% YoY) were impacted by higher exploration write-offs expenses. Oil/gas production at 5.9mmt/6.6 bcm were in-line. OVL earnings at Rs16.8 bn (1.8x YoY) were impacted by Rs15 bn impairment charges. We raise TP to Rs230 (from 225), on roll over to Mar'20 and higher investments value. Valuations seem to be factoring the worst-case...

Upstream companies were out of flavour despite realizing market price for crude oil, mainly on account of lower provisioning of budgetary support in FY19 (Rs 248bn). The subsidy sharing concern allayed when the Govt. committed to settle Rs 430bn of subsidy from its own pocket. We do not foresee any subsidy sharing burden on upstream companies if crude oil prices remain below USD80/bbl. In the absence of overhang of subsidy sharing, upstream companies should be re-rated. Our TP is Rs 191/sh (8x Mar-21E standalone core EPS (adj. for dividend income), + OVL EPS and Rs 39 from other investments). Concerns over lack of crude oil production growth still persist. However, we expect re-rating of ONGC as fears of subsidy burden have allayed. Adjusting for its investments (OVL+ other) the stock is trading at 6.8x FY21E standalone EPS. This indicates strong pessimism and we expect re-rating of upstream companies. Maintain BUY.

INR40.4b (-46% est., -32% YoY) was led by higher DD&A; at USD13.2/bbl in 4QFY19 (v/s USD10.9/bbl in 4QFY18 and USD9.1/bbl in 3QFY19). For FY19, total EBITDA/PAT were up 34% YoY at INR594.6b/INR267.2b. The impairment charge of INR15b relates to two assets of OVL block 5A in South Sudan and Imperial. Royalty was higher at INR42b (~48% YoY) due to...

-32% YoY), respectively. EBIDTA was impacted by higher other expense and higher than expected statutory levies for JV oil production. For Q4, JV statutory levies of Rs19.9bn (Q3 Rs3.3bn) included Rs10bn for lower royalty contribution for earlier period as ONGC will continue to bear 100% of royalty share for the Rajasthan asset against earlier estimate of only 30% share. Higher DD&A; due to change in depletion policy also affected profits. For FY19, standalone EBIDTA and PAT were at Rs594bn (+34%YoY) and Rs267bn (+34%YoY) respectively. Realization come off tracking international prices: For Q4, operational...

The company has set up a 1.9mmtpa (1.1mmtpa ethylene, 0.4mmtpa propylene and rest is chemicals) petrochemical complex in Dahej, Gujarat. The complex was commissioned in Mar17 and built with a total capex of INR308b (including interest cost of ~INR90b). The plants are running at ~90% utilization rates in an integrated fashion. EBITDA margin for the company stands at ~18-20%, with higher domestic realization. OPaL expects to achieve EBITDA of ~INR15b in FY19, ~INR25b in FY20 (with full utilization), and ~INR35b after (a) the completion of the Hazira-Dahej Naphtha pipeline, (b) the exit from SEZ and (c) the completion of other debottlenecking by FY21. OPaL was created with an intention of producing value products using ONGCs naphtha from Hazira, and ethane, propane and butane from ONGCs extraction plant at Dahej. Dahej complex has a total of eight furnaces, with flexibility of changing feedstock inputs, base design for 60% naphtha and 40% gases.

ICICI Securities Ltd | Retail Equity Research ONGC declared its Q3FY19 results, which were above our estimates on the profitability front. The quarter witnessed nil subsidy burden and net realisations stood at US$ 66.4/bbl (above our estimate). As a...