Hold Oil and Natural Gas Corporation; target of Rs 110: ICICI Direct

February 18
14:24 2020

ICICI Direct’s research report on Oil and Natural Gas Corporation

ONGC declared its O3FY20 results that were below our estimates on the profitability front, mainly due to higher depreciation & amortisation costs and lower other income. Revenues declined 3.2% QoQ at Rs 23710.1 crore (our estimate: Rs 22823.2 crore) on account of marginally lower realisations as well as sales volume QoQ. The oil & gas production was largely in line with our estimates. As per expectations, the quarter witnessed nil subsidy burden while net realisations were at US$ 59.7/bbl. EBITDA during the quarter declined 7.5% QoQ and came in at Rs 12298.3 crore (our estimate: Rs 11708.7 crore). Subsequently, reported PAT declined 33.7% QoQ to Rs 4151.6 crore (our estimate: Rs 5932.3 crore).


We have a HOLD rating on the stock with a target price of Rs 110/share. We value core business i.e. standalone & OVL at Rs 90/share (6x FY22E core earnings) & investments at Rs 20/share (50% discount to current MCap).

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