ONGC 2018-19 Annual Report Analysis

Sun, 31 Mar

ONGC has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

ONGC Income Statement Analysis

• Operating income during the year rose 37.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 40.8% YoY during the fiscal. Operating profit margins witnessed a fall and down at 14.1% in FY19 as against 13.8% in FY18.
• Depreciation charges increased by 2.6% and finance costs increased by 14.2% YoY, respectively.
• Other income declined by 8.1% YoY.
• Net profit for the year grew by 17.0% YoY.
• Net profit margins during the year declined from 9.2% in FY18 to 7.8% in FY19.

ONGC Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	2,831,651	3,895,689	37.6%
Other income	Rs m	288,904	265,641	-8.1%
Total Revenues	Rs m	3,120,555	4,161,331	33.4%
Gross profit	Rs m	390,499	549,747	40.8%
Depreciation	Rs m	231,119	237,037	2.6%
Interest	Rs m	56,209	64,177	14.2%
Profit before tax	Rs m	392,075	514,174	31.1%
Tax	Rs m	131,395	209,076	59.1%
Profit after tax	Rs m	260,680	305,098	17.0%
Gross profit margin	%	13.8	14.1
Effective tax rate	%	33.5	40.7
Net profit margin	%	9.2	7.8

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ONGC Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 1,298 billion as compared to Rs 1,268 billion in FY18, thereby witnessing an increase of 2.3%.
• Long-term debt down at Rs 522 billion as compared to Rs 550 billion during FY18, a fall of 5.2%.
• Current assets rose 6% and stood at Rs 875 billion, while fixed assets rose 7% and stood at Rs 4,529 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 5,404 billion as against Rs 5,049 billion during FY18, thereby witnessing a growth of 7%.

ONGC Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	2,040,189	2,169,347	6.3
Current Liabilities	Rs m	1,268,205	1,297,579	2.3
Long-term Debt	Rs m	550,249	521,680	-5.2
Total Liabilities	Rs m	5,048,812	5,404,128	7.0
Current assets	Rs m	822,838	874,639	6.3
Fixed Assets	Rs m	4,225,974	4,529,489	7.2
Total Assets	Rs m	5,048,812	5,404,128	7.0

ONGC Cash Flow Statement Analysis

• ONGC's cash flow from operating activities (CFO) during FY19 stood at Rs 615 billion, an improvement of 8.2% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs -373 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -233 billion on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 10 billion from the Rs -967 million net cash flows seen during FY18.

ONGC Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	567,921	614,576	8.2%
Cash Flow from Investing Activities	Rs m	-671,112	-373,317	-
Cash Flow from Financing Activities	Rs m	99,094	-233,245	-
Net Cash Flow	Rs m	-967	10,015	-

Current Valuations for ONGC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 24.3, an improvement from the EPS of Rs 20.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 159.6, stands at 7.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.9 times, while the price to sales ratio stands at 0.5 times.
• The company's price to cash flow (P/CF) ratio stood at 3.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	220.6	309.7
TTM Earnings per share	Rs	20.3	24.3
Diluted earnings per share	Rs	20.7	24.3
Price to Cash Flow	x	4.5	3.7
TTM P/E ratio	x	11.2	7.5
Price / Book Value ratio	x	1.2	0.9
Market Cap	Rs m	2,362,599	2,010,329
Dividends per share (Unadj.)	Rs	6.6	7.0

Ratio Analysis for ONGC

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 0.7x during FY19, from 0.6x during FY18. 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 improved and stood at 9.0x during FY19, from 8.0x during FY18. 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 improved and stood at 14.1% during FY19, from 12.8% during FY19. 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 improved and stood at 21.5% during FY19, from 17.3% during FY18. 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 improved and stood at 6.8% during FY19, from 6.3% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	0.6	0.7
Debtors’ Days	Days	18	14
Interest coverage	x	8.0	9.0
Debt to equity ratio	x	0.3	0.2
Return on assets	%	6.3	6.8
Return on equity	%	12.8	14.1
Return on capital employed	%	17.3	21.5

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 down from Rs 177.8 to Rs 159.6, registering a loss of Rs 18.3 or around 10.3%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 15,269.7 (up 0.9%). Over the last one year it has moved up from 14,614.4 to 15,269.7, a gain of 655 points (up 4.5%).

Overall, the S&P BSE SENSEX is up 16.3% over the year.

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

Read: Latest Annual Report Analysis of ONGC