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ONGC: Impairment Loss Drags Profits - Views on News from Equitymaster
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ONGC: Impairment Loss Drags Profits
Mar 1, 2016

Oil and Natural Gas Corporation Ltd has announced results for the quarter ended December 2015. The topline for the quarter declined 1.7% year on year (YoY) while bottomline degrew by 64% YoY, on a standalone basis.

Performance summary

  • Net sales for the quarter declined 1.7% year on year (YoY). For 9MFY16, the net sales were up 1.4% YoY.
  • The operating profits for the quarter grew 14.8% YoY with margins at 43.2% (versus 37.0% in 2QFY15). For 9MFY16, the operating profit grew by 9.9% YoY, with operating profit margin at 43.9% versus 40.5% in 9MFY15.
  • The firm registered 64% YoY decline in the bottomline during the quarter with net profit margins at 7.0% versus 19.1% in 3QFY15. This was mainly on account of impairment provision (on 1P reserves, due to decline in oil price) worth Rs 40 bn for the quarter. For 9MFY16, net profit declined 16% YoY, with net profit margin at 18.8%, down from 22.7% in 9MFY15.
  • The subsidy burden was nil for the quarter while it impacted bottomline to the extent of Rs 54 bn in 3QFY15.
  • Net realization for the quarter stood at US$ 44.34 per barrel versus US$ 35.52 per barrel in the corresponding quarter last year. Net realizations for 9MFY16 stood at US$ 50.56 per barrel versus US$ 41.21 per barrel in 9MFY15. In rupee terms, realizations grew 32.7% YoY during the quarter.
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