ONGC 2019-20 Annual Report Analysis

Tue, 31 Mar

ONGC has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

ONGC Income Statement Analysis

• Operating income during the year fell 5.4% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 47.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 7.8% in FY20 as against 14.1% in FY19.
• Depreciation charges increased by 12.4% and finance costs increased by 25.6% YoY, respectively.
• Other income declined by 9.5% YoY.
• Net profit for the year declined by 65.5% YoY.
• Net profit margins during the year declined from 7.8% in FY19 to 2.9% in FY20.

ONGC Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	3,895,689	3,685,641	-5.4%
Other income	Rs m	265,641	240,345	-9.5%
Total Revenues	Rs m	4,161,331	3,925,986	-5.7%
Gross profit	Rs m	549,747	286,876	-47.8%
Depreciation	Rs m	237,037	266,349	12.4%
Interest	Rs m	64,177	80,579	25.6%
Profit before tax	Rs m	514,174	180,293	-64.9%
Tax	Rs m	209,076	75,062	-64.1%
Profit after tax	Rs m	305,098	105,231	-65.5%
Gross profit margin	%	14.1	7.8
Effective tax rate	%	40.7	41.6
Net profit margin	%	7.8	2.9

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ONGC Balance Sheet Analysis

• The company's current liabilities during FY20 down at Rs 1,251 billion as compared to Rs 1,298 billion in FY19, thereby witnessing an decrease of -3.6%.
• Long-term debt stood at Rs 729 billion as compared to Rs 522 billion during FY19, a growth of 39.8%.
• Current assets fell 8% and stood at Rs 807 billion, while fixed assets fell 6% and stood at Rs 4,266 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 5,074 billion as against Rs 5,404 billion during FY19, thereby witnessing a fall of 6%.

ONGC Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	2,169,347	2,051,046	-5.5
Current Liabilities	Rs m	1,297,579	1,250,726	-3.6
Long-term Debt	Rs m	521,680	729,316	39.8
Total Liabilities	Rs m	5,404,128	5,073,501	-6.1
Current assets	Rs m	874,639	807,095	-7.7
Fixed Assets	Rs m	4,529,489	4,266,407	-5.8
Total Assets	Rs m	5,404,128	5,073,501	-6.1

ONGC Cash Flow Statement Analysis

• ONGC's cash flow from operating activities (CFO) during FY20 stood at Rs 706 billion, an improvement of 14.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs -535 billion, an improvement of 43.3% on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -167 billion, an improvement of 28% on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs 7 billion from the Rs 10 billion net cash flows seen during FY19.

ONGC Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	614,576	705,930	14.9%
Cash Flow from Investing Activities	Rs m	-373,317	-534,983	-
Cash Flow from Financing Activities	Rs m	-233,245	-167,264	-
Net Cash Flow	Rs m	10,015	7,076	-29.3%

Current Valuations for ONGC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 8.4, an decline from the EPS of Rs 24.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 68.3, stands at 8.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 0.4 times, while the price to sales ratio stands at 0.2 times.
• The company's price to cash flow (P/CF) ratio stood at 3.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	309.7	293.0
TTM Earnings per share	Rs	24.3	8.4
Diluted earnings per share	Rs	24.3	8.4
Price to Cash Flow	x	3.7	3.9
TTM P/E ratio	x	7.5	8.4
Price / Book Value ratio	x	0.9	0.7
Market Cap	Rs m	2,010,329	1,451,764
Dividends per share (Unadj.)	Rs	7.0	5.0

Ratio Analysis for ONGC

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.6x during FY20, from 0.7x during FY19. 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 3.2x during FY20, from 9.0x during FY19. 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 5.1% during FY20, from 14.1% during FY20. 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 9.4% during FY20, from 21.5% during FY19. 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 3.7% during FY20, from 6.8% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	0.7	0.6
Debtors’ Days	Days	14	9
Interest coverage	x	9.0	3.2
Debt to equity ratio	x	0.2	0.4
Return on assets	%	6.8	3.7
Return on equity	%	14.1	5.1
Return on capital employed	%	21.5	9.4

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 159.6 to Rs 68.3, registering a loss of Rs 91.3 or around 57.2%.

Meanwhile, the S&P BSE OIL & GAS Index is trading at Rs 10,020.9 (up 8.7%). Over the last one year it has moved down from 15,269.7 to 10,020.9, a loss of 5,249 points (down 34.4%).

Overall, the S&P BSE SENSEX is down 24.2% 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