ONGC Profitable Again. Posts Rs 67.3 bn Bottomline

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  • Jun 25, 2021 - ONGC Profitable Again. Posts Rs 67.3 bn Bottomline

ONGC Profitable Again. Posts Rs 67.3 bn Bottomline podcast

Jun 25, 2021

State run Oil & Natural Gas Corporation (ONGC) on Thursday reported a standalone net profit of Rs 67.3 bn in the March quarter.

This compared with a loss of Rs 32.1 bn in the year-ago quarter.

The profit was mainly driven by higher realisation. Net realisation increased by 18.4% to US$58.05 a barrel in the March quarter, compared to US$49.01 a barrel the same quarter last year.

This was due to rise in crude oil prices amid hope for demand recovery.

Prices of benchmark brent crude rose as much as 35% to US$60.7 per barrel in the three months through March.

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Key financial highlights

Sequentially, ONGC's net profit rose over fivefold.

An exceptional income of Rs 26.1 bn aided the oil & gas major's bottomline.

Revenues rose 24.5% to Rs 211.9 bn as other income rose 157% over the last quarter to Rs 31.3 bn.

Financial Snapshot

(Rs bn) Q4FY21 Q4FY20 Q3FY21 YoY (%) QoQ (%)
Revenues 211.9 214.6 170.2 -1.3% 24.5%
Total Expenses 180.1 218.9 155.4 -17.7% 15.9%
Profit before tax 89.3 -40.1 27.1 322.7% 229.5%
Tax 21.9 -7.9 14.4 377.2% 52.1%
Profit after tax 67.3 -32.1 12.6 309.7% 434.1%
Data Source: Company Filings

For the financial year ended March 2021, ONGC reported its gross revenue of Rs 681.4 bn, a de-growth of 29.2% as compared to the previous year.

The company's bottomline for the full year also declined by 16.5%, from Rs 134.6 bn to Rs 112.5 bn.

Despite lockdowns, ONGC managed to reach last year's production levels in case of crude oil from its operated blocks.

ONGC's board recommended a final dividend of 37% (Rs 1.85 per share).

Earlier, ONGC had declared an interim dividend of 35% (Rs 1.75 per share) during the year.

The total dividend for financial year 2020-21 would be Rs 3.60 per share amounting to a total payout of Rs 45.3 bn.

Transfer of ONGC's assets

Assam's Chief Minister Himanta Biswa Sarma has requested Prime Minister Narendra Modi to consider transferring all assets of the ONGC in the northeast to Oil India because of the latter's roots in the region.

Here's what he wrote in the letter.

  • It has been felt that the operations in the entire north-eastern region may be carried out by one major operator, preferably OIL as it was born in Assam and had commendable interaction with the local populace.

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He also cited that the Assam and Assam-Arakan basin together had an estimated hydrocarbon deposit of 7,634 m metric tonnes of oil equivalent and hold 5,588 m metric tonnes of oil equivalent of yet-to-find resource potential, which was next only to the Krishna-Godavari Basin.

Oil India is a company rooted in the north-eastern region with more than 90% of employees from the region.

Assam and Assam-Arakan Basin in the northeast are the most prolific sedimentary basins in India. Both public sector undertakings (PSUs) Oil India and ONGC are the major operators in the region.

What's supporting ONGC's share price?

ONGC share price rose over 2% in the early trade today after the company posted profit in the quarter ended March 2021.

However, shares of the company erased gains and ended the day down by 0.7%.

ONGC shares have been on an uptrend recently. Over the past one year, they have gained 47% owing to rise in crude oil prices.

Stock of the company touched a 52-week high of Rs 128.45 earlier this month on 15 June.

At the current price of Rs 121, the company commands a marketcap of Rs 1,524.1 bn.

Rising crude oil and natural gas prices are the key factors supporting ONGC's share price.

International gas prices are also rebounding on recovering demand. The average price of the natural gas benchmark - Japan Korea Marker - surged more than 45% in May over the average price of March, according to a report.

Explorers such as ONGC, Oil India, and GAIL (India) benefit from rising gas prices.

Meanwhile, brent crude prices are trading above the US$75 per barrel mark.

Brent climbed over US$76 per barrel yesterday to the highest level since October 2018.

Note that yesterday, India flagged its concerns over the increasing crude oil prices and its impact on consuming nations with Organisation of the Petroleum Exporting Countries (OPEC).

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India' concern was articulated by petroleum and natural gas minister Dharmendra Pradhan during his meeting with OPEC Secretary General Mohammed Sanusi Barkindo wherein reiterated his request of phasing out production cuts.

Rise in crude has led to a hike in transportation fuel prices. Diesel and petrol prices having already breached the Rs 100 mark in several parts of India.

Since we are on the topic of crude oil, many are wondering if prices will continue to go up or the rally is about to end.

India's #1 trader, Vijay Bhambwani recorded a video explaining why oil prices won't go to US$100 a barrel.

Vijay thinks the price is being artificially help up and the bull market in energy won't last.

About Oil & Natural Gas Corporation

Maharatna ONGC is the largest crude oil and natural gas company in India contributing around 75% to Indian domestic production.

Crude oil is the raw material used by downstream companies like Indian Oil Corp (IOC), BPCL, and HPCL (subsidiary of ONGC) to produce petroleum products like petrol diesel kerosene naphtha and cooking gas-LPG.

The company's subsidiaries also include ONGC Videsh, MRPL, and ONGC Mangalore Petrochemicals.

The company's oil and gas reserves are located internationally in Russia, Colombia, Vietnam, Brazil, and Venezuela.

For more details about the company, you can have a look at ONGC company factsheet and ONGC quarterly results on our website.

For a sector overview, read our energy sector report.

You can also compare ONGC with its peers.

ONGC vs Petronet LNG

ONGC vs BPCL

ONGC vs IOC

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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