ONGC's PAT likely to fall 13% at Rs 6150 cr in Q3

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ONGC's PAT likely to fall 13% at Rs 6150 cr in Q3

State-owned oil producer ONGC is expected to report a profit after tax of Rs 6,150 crore in the October-December quarter of FY12, degrowth of 13.2% as compared to Rs 7,083 crore in a year ago quarter.

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State-owned oil producer ONGC is expected to report a profit after tax of Rs 6,150 crore in the October-December quarter of FY12, degrowth of 13.2% as compared to Rs 7,083 crore in a year ago quarter.

Sales are seen going down by 7.5% to Rs 17,200 crore from Rs 18,586 crore year-on-year.

Operating profit margin is expected to decline at 57.5% in the third quarter of FY12 versus 65% in the corresponding quarter of last fiscal and 63.11% in the previous quarter.

On quarter-on-quarter basis, company's sales are likely to fall 24% and PAT is seen going down 28.8%.

Highlights

* Brent crude was down 3% QoQ

* So ONGC's gross realizations should decline to USD 112/barrel versus USD 116.7/barrel in Q2 

* As per the revised figures ONGC will provide a subsidy of Rs 12,536 crore for 9 months

* This new subsidy calculation will pull net realizations below USD 50/barrel

* This is a steep fall from above USD 83.6/barrel in last quarter and USD 64.8/barrel in Q3 of last year

* Upstream subsidy for 9 months tentatively based on the finance ministry formula 

* So ONGC is extending a USD 56/barrel discount for the first 9 months

* Because of the H1 adjustment the discount in Q3 will be over USD 65/barrel 

* Market is wondering if this formula will hold for the full year; but it looks unlikely 

* Q3 reported PAT will find support from royalty writeback

* It's a one time income of Rs 2500 crore from Cairn (Excess royalty that ONGC paid on the Rajasthan block) 

* Production expected to be largely flat QoQ

* DD&A, other expenses remain variables