ONGC slips up to 4% after reporting a first-ever loss in March quarter

Shares of Oil and All-natural Gasoline Corporation (ONGC) slipped as a lot as 3.93 for every cent to Rs seventy eight.20 apiece on the BSE on Wednesday, a day soon after the condition-run oil and gas business posted a pre-tax loss of Rs 10,529 crore in the fourth quarter of the economical year 2019-20 (Q4FY20). The loss was because of to a fall in crude oil costs, the impact of the Covid-19-induced lockdown, and trade losses. It was ONGC’s 1st-ever quarterly loss.

At 09:29 am, the stock was investing 1.six for every cent decreased at Rs eighty.10 on the BSE. In comparison, the S&P BSE Sensex was quoting .5 for every cent higher at 35,099 degrees.

ONGC experienced logged a financial gain before tax (PBT) of Rs 11,691 crore in the corresponding period of time of FY19. The company’s income from functions declined by seven for every cent to Rs 104,489 crore in the period of time under review, when compared to Rs 112,539 crore the prior year. Click on Below TO Browse Entire REPORT

During the quarter under review, the company’s net realisation on crude was noticed $49.01 a barrel, as in opposition to $61.93 a barrel a year in the past. Gasoline price for the quarter was also decreased at $3.23 for every million metric British thermal device (mmBtu), when compared to $3.36 a mmBtu in the year-in the past period of time.

Analysts at Motilal Oswal Economical Expert services (MOFSL), in an earnings review report, notice that world-wide lockdowns on account of Covid-19 led to enormous need destruction, which noticed crude oil costs sink to historic lows. With the lifting of the lockdowns throughout the earth, need is again viewing an uptick. On the provide aspect, production cuts, equally intentional (OPEC++) and unintended (because of to weak economies/bankruptcies) appear to be placing upward stress on oil costs, they wrote.

“ONGC is predicted to expand its gas production by practically 12 for every cent / 26 for every cent to 27.9bcm/35.2bcm in FY21/FY22E. Though no oil production development is predicted, ONGC’s efforts to arrest decrease from age-previous fields (accounting for 60–70 for every cent of the full oil production) is commendable,” the brokerage stated. It has preserved a “Purchase” rating on the stock with the goal price of Rs one zero five.

“With oil out of the woods, we revert to discounted dollars movement DCF-primarily based reasonable value of ONGC’s oil & gas reserves from 10x FY21E earnings for every share (EPS) before. Our DCF-primarily based valuation, assuming Brent at US$forty/bbl in FY21E, US$forty five/bbl in FY22E

and long-time period Brent at US$50/bbl, performs out to Rs124/share (fifty two% upside),” says ICICI Securities.

It further more says that under the prevailing gas pricing formulation (linked to gas costs in 4 nations around the world of which three are net exporters), gas costs would be practically US$two.two/mmbtu in FY21E. Deregulation of gas costs could improve trader sentiment in ONGC and strengthen its gas costs step by step to US$four/mmbtu or higher. The current start out of the gas investing trade and the oil minister’s reviews at the start of the trade is also predicted to support the business.

Besides, a increase in oil costs would also be a share price driver, it says in its rating rationale. The brokerage has upgraded the stock to ‘Buy’ from ‘Hold’ with the goal price of Rs 124.