Oil and Natural Gas Corp. may post a more than 60 percent increase in standalone second-quarter profit after tax from last year and a 52 percent rise in revenue, supported by higher crude oil prices, better realisations and lower operating costs, experts said.
On a quarterly basis, PAT at India’s largest oil exploration company is expected to grow by 40 percent and revenue may improve by 12 percent, they said.
State-owned ONGC is scheduled to announce its results for the July-September quarter on November 12.
The company reported standalone PAT of Rs 3,771 crore (before exceptional items) and revenue of Rs 16,917 crore in the corresponding period last year. In the first quarter of this financial year, PAT was Rs 4,335 crore and revenue Rs 23,022 crore.
Street’s expectations
“ONGC is expected to benefit from $5/bbl. q-o-q jump in oil realisation, lower operating cost and marginal rupee depreciation, while gas realisations are expected to remain stable sequentially,” said Sharekhan. Additionally, ONGC would benefit from higher realisations on sales of value-added products.
The brokerage expects 52 percent y-o-y and 12 percent q-o-q growth in revenue to Rs 25,763 crore with operating margins improving from 49.9 percent last year to 52.2 percent in Q2. On a sequential basis, operating margins are likely to decline 62 basis points. One basis point is equal to one-hundredth of 1 percent.
This will result in PAT increasing 58 percent y-o-y and 37 percent q-o-q to Rs 3,771 crore.
“Uptick in Brent prices coupled with multiyear high gas prices put ONGC in a sweet spot,” Motilal Oswal said.
Net realisations are likely to grow by about 76 percent y-o-y and about 11 percent q-o-q, led by an increase in crude oil prices.
“Expect oil sales to be largely flat y-o-y and q-o-q, but gas sales to rise by 11 percent q-o-q (flat y-o-y),” the brokerage said.
It expects ONGC’s revenue to grow 53 percent y-o-y and 12 percent q-o-q to Rs 25,810 crore. EBITDA (earnings before interest, taxes, depreciation and amortisation) is expected to increase 59 percent y-o-y and 11 percent q-o-q to Rs 13,430 crore.
EBITDA margins are likely to rise to 52 percent from 49.9 percent a year earlier. This bottom line may increase 67 percent y-o-y and 45 percent q-o-q to Rs 6,310 crore.
“We expect overall crude oil sales volumes to increase 3 percent y-o-y on a low base to 5.2 million tonnes and natural gas sales volumes to decline 7 percent y-o-y to 4.25 billion cubic metres, in line with recent production trends,” Kotak Institutional Equities said.
It estimates revenue at Rs 25,668 crore in Q2 and EBITDA to rise 62.5 percent y-o-y to Rs 13,704 crore.
“We expect 13 percent q-o-q increase in EBITDA led by higher crude realisation at $70.9/bbl. (+$5.3/bbl q-o-q) and higher price of value-added products,” said Kotak.
It said EBITDA margins for the quarter may come in at 53.4 percent from 49.9 percent a year earlier and 52.8 percent in the previous quarter. PAT may increase 97 percent y-o-y and 71 percent q-o-q to Rs 7,414 crore, as per the brokerage.
The ONGC stock declined 2.7 percent to Rs 153.50 at the close on the BSE on November 11. The shares have more than doubled in the past one year.