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ONGC: A weak quarter - Views on News from Equitymaster
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ONGC: A weak quarter
May 30, 2013

Oil and Natural Gas Corporation Ltd has announced results for the fourth quarter of financial year 2012-13 and for full year FY13. The topline registered 8.5% year on year (YoY) growth during the year while bottomline was down by 16.7% YoY. Here is our analysis of the results.

Performance summary
  • Topline for the quarter grew by 12.9% YoY. For FY13, the revenues were up by 8.5% YoY.
  • The crude oil production for the quarter declined by 1.8% YoY. The natural gas production for the quarter was also down by 7% YoY during the quarter.
  • The operating profits were down by 25.3% YoY during the quarter with margins at 27.5% (versus 41.5% in 4QFY12). The decline was mainly on account of fall in gas production, increase in operating costs and higher provisioning expenses. For FY13, the operating profits were down by 8.4% YoY with operating profit margins at 40.3% versus 47.8% in FY12.
  • The firm registered 40.0% YoY decline in the bottomline during the quarter with net profit margins at 15.5% versus 29.2% in 4QFY12. Despite lower subsidy burden, the net profits were down for the quarter due to exceptional onetime expense. ONGC has provided an amount of Rs 18.5 bn on account of difference of employer's contribution towards superannuation benefits up to 30%. In FY13, the net profits were down by 16.7% YoY, with margins at 25.2% versus 32.8% in FY12.
  • ONGC shared under recoveries of oil marketing companies because of which its net profits for the quarter declined by Rs 69 bn. This compares to an erosion of Rs 72.6 bn in 3QFY13 and Rs 82.1 bn in 4QFY12 .The subsidy discount for the quarter stood at Rs 123 bn, down 13% YoY.. For FY13, the subsides paid stood at Rs 494 bn, up 11% YoY. As a result, the bottomline was pulled down by Rs 284 bn (as compared to an adverse impact of Rs 255.4 bn in FY12).
  • ONGC's board of directors has recommended a final dividend of Rs 0.5 per share. The total dividend for FY13 stands at Rs 81.3 bn, down 3% YoY.
  • ONGC has new gas discoveries in the KG shallow offshore basin and Western offshore basin in Kutch.

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