ONGC 2017-18 Annual Report Analysis

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ONGC 2017-18 Annual Report Analysis
Wed, 19 Dec

ONGC has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

ONGC Income Statement Analysis

  • Operating income during the year rose 11.2% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 7.7% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 15.7% in FY18 as against 16.2% in FY17.
  • Depreciation charges increased by 14.2% and finance costs increased by 39.2% YoY, respectively.
  • Other income declined by 19.9% YoY.
  • Net profit for the year declined by 10.6% YoY.
  • Net profit margins during the year declined from 8.7% in FY17 to 7.1% in FY18.

ONGC Income Statement 2017-18

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Net Sales Rs m 3,256,662 3,622,462 11.2%
Other income Rs m 93,232 74,682 -19.9%
Total Revenues Rs m 3,349,894 3,697,143 10.4%
Gross profit Rs m 528,037 568,657 7.7%
Depreciation Rs m 202,192 230,885 14.2%
Interest Rs m 35,911 49,990 39.2%
Profit before tax Rs m 383,165 362,463 -5.4%
Tax Rs m 125,484 131,395 4.7%
Profit after tax Rs m 291,691 260,680 -10.6%
Gross profit margin % 16.2 15.7
Effective tax rate % 32.7 36.3
Net profit margin % 8.7 7.1
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



ONGC Balance Sheet Analysis

  • The company's current liabilities during FY18 down at Rs 1,170 billion as compared to Rs 1,240 billion in FY17, thereby witnessing an decrease of -5.7%.
  • Long-term debt stood at Rs 550 billion as compared to Rs 528 billion during FY17, a growth of 4.3%.
  • Current assets fell 8% and stood at Rs 730 billion, while fixed assets rose 7% and stood at Rs 2,258 billion in FY18.
  • Overall, the total assets and liabilities for FY18 stood at Rs 4,602 billion as against Rs 4,454 billion during FY17, thereby witnessing a growth of 3%.

ONGC Balance Sheet as on March 2018

No. of Mths Year Ending 12 Mar-17* 12 Mar-18* % Change
Networth Rs m 1,943,852 2,040,189 5.0
 
Current Liabilities Rs m 1,240,293 1,169,672 -5.7
Long-term Debt Rs m 527,723 550,249 4.3
Total Liabilities Rs m 4,453,975 4,602,349 3.3
 
Current assets Rs m 792,224 730,369 -7.8
Fixed Assets Rs m 2,118,611 2,257,629 6.6
Total Assets Rs m 4,453,975 4,602,349 3.3
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



ONGC Cash Flow Statement Analysis

  • ONGC's cash flow from operating activities (CFO) during FY18 stood at Rs 583 billion, an improvement of 27.3% on a YoY basis.
  • Cash flow from investing activities (CFI) during FY18 stood at Rs -665 billion, an improvement of 47.6% on a YoY basis.
  • Cash flow from financial activities (CFF) during FY18 stood at Rs 82 billion, an improvement of 537% on a YoY basis.
  • Overall, net cash flows for the company during FY18 stood at Rs -967 million from the Rs 989 million net cash flows seen during FY17.

ONGC Cash Flow Statement 2017-18

Particulars No. of months 12 12 % Change
Year Ending Mar-17 Mar-18
Cash Flow from Operating Activities Rs m 457,805 582,926 27.3%
Cash Flow from Investing Activities Rs m -450,561 -665,214 -
Cash Flow from Financing Activities Rs m -18,671 81,683 -
Net Cash Flow Rs m 989 -967 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Current Valuations for ONGC

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 20.3, an decline from the EPS of Rs 22.7 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 148.5, stands at 7.5 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 1.2 times, while the price to sales ratio stands at 0.7 times.
  • The company's price to cash flow (P/CF) ratio stood at 4.1 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*
Sales per share (Unadj.) Rs 253.8 282.3
TTM Earnings per share Rs 22.7 20.3
Diluted earnings per share Rs 22.7 20.3
Price to Cash Flow x 4.1 4.1
TTM P/E ratio x 7.5 7.5
Price / Book Value ratio x 1.1 1.2
Market Cap Rs m 1,905,736 1,905,736
Dividends per share (Unadj.) Rs 9.1 6.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



Ratio Analysis for ONGC

  • Solvency Ratios
  • Current Ratio: The company's current ratio improved and stood at 0.6x during FY18, from 0.6x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

    Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 8.3x during FY18, from 11.7x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

  • Profitability Ratios
  • Return on Equity (ROE): The ROE for the company declined and down at 12.8% during FY18, from 15.0% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

    Return on Capital Employed (ROCE): The ROCE for the company declined and down at 17.1% during FY18, from 18.3% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

    Return on Assets (ROA): The ROA of the company declined and down at 6.8% during FY18, from 7.4% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*
Current ratio x 0.6 0.6
Debtors’ Days Days 14 14
Interest coverage x 11.7 8.3
Debt to equity ratio x 0.3 0.3
Return on assets % 7.4 6.8
Return on equity % 15.0 12.8
Return on capital employed % 18.3 17.1
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



To see how ONGC has performed over the last 5 years, please visit here.

ONGC Share Price Performance

Over the last one year, ONGC share price has moved up from Rs 185.2 to Rs 148.5, registering a loss of Rs 36.7 or around 19.8%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 13,808.8 (up 1.2%). Over the last one year it has moved down from 16,410.2 to 13,808.8, a loss of 2,601 points (down 15.9%).

Overall, the S&P BSE SENSEX is up 8.7% over the year.

(To know more, check out historical annual results for ONGC and quarterly results for ONGC)

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