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Recommendation: Reduce
Target price: Rs150
Oil and Natural Gas Corporation (ONGC) could witness pressure on earnings (sequentially) owing to lower crude prices and imposition of export taxes from 1st July. Crude averaged USD 98/bbl during the quarter while the APM prices were stagnant at USD 6.1/mmbtu on a sequential basis. There could be some benefit to ONGC and other upstream companies arising from deregulation of oil sales from government defined procedure to a free market one.
As compared to the year-ago quarter, strong crude realizations are likely to be restricted by windfall taxes.
ONGC’s Profit After Tax or PAT could decline both sequentially as well as over the year-ago quarter.
Important management insights to watch out for:
-
Update on gas production from the KG Basin and key timelines thereof -
Outlook on various field developments
|
Rs. Million |
September 2022 estimates |
YoY change |
QoQ change |
|
Profit After Tax |
91,740 |
(50)% |
(40)% |
Source: Company, IIFL Research
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