Oil and Natural Gas Corp (ONGC) is expected to witness more than 500 percent increase in its standalone profit after tax (PAT) compared to last year and standalone revenues are expected to grow by 65 percent on-year supported by higher crude and gas prices partially negated by the decline in volumes.
On a quarterly basis, adjusted PAT is expected to decline by 4 percent and revenues may improve by 15 percent, experts said.
The state-owned oil and gas exploration and production company is scheduled to announce its results for the quarter ended December 2021 later in the day today.
The company had reported a standalone PAT of Rs 1,378 crore in the corresponding period a year ago, with revenues of Rs 17,024 crore. In the previous quarter of this fiscal, the PAT for the company stood at Rs 18,348 crore with revenues at Rs 24,354 crore. The company had received a deferred and current tax credit of Rs 8,686 crore.
Brokerage firm Kotak Institutional Equities expect the company to report 65 percent on-year growth in revenues to Rs 28,052 crore. On a sequential basis, the revenues may grow by 15 percent.
EBITDA (earnings before interest, tax, depreciation and amortization) is likely to grow 88 percent on-year and 18.4 percent quarter on quarter to Rs 15,662 crore.
“We expect 18 percent increase in EBITDA led by (1) higher crude realization at USD 75/bbl (higher by USD 6/bbl QoQ), (2) a sharp sequential rise in domestic gas price to USD 3.2/mn BTU from USD 2/mn BTU in the previous quarter and (3) higher price of value-added products,” the brokerage said in its report.
It expects the overall crude oil sales volumes to decline 4 percent on-year to 5.1 million tons and natural gas sales volumes to decline 4 percent on-year to 4.4 bcm (billion cubic meters), which is broadly in line with the recent production trends.
Basis this, EBITDA margins are likely to expand 680 bps to 55.8 percent for the quarter from 49 percent in the same quarter a year ago. Compared to the previous quarter, the EBITDA margins are likely to improve by 152 bps.
Kotak expects PAT of Rs 8,821 crore at a year on year growth of 540 percent. Adjusting for the deferred tax credit in the previous quarter, the profit is likely to grow by 2 percent quarter on quarter.
According to a report from Motilal Oswal Financial Services, the revenue for the quarter is expected to increase by 67.5 percent on-year to Rs 28,514 crore.
The brokerage expects “net realizations to grow ~78 percent on year and ~11 percent on quarter, led by an increase in crude oil prices”. Oil sales are likely to decline by 4 percent on-year but improve 2 percent quarter on quarter while gas sales are expected to decline 6 percent on-year and remain flat quarter on quarter.
Gas production from the KG basin remains crucial as any further delay could dampen near-term sentiment.
EBITDA margins for the quarter are likely at 55.1 percent with an EBITDA of 15,720 crore. The margins are seen improving by 610 bps year on year and 80 bps on quarter.
PAT is expected at Rs 8,190 crore which is a growth of 550 percent from the profit reported in the same period last year. After adjusting for deferred tax credit received in the previous quarter, the profit is seen declining by 3.5 percent on a sequential basis.
ONGC closed at Rs 169.1, up Rs 5.15 (+3.14 percent) from its previous close at the National Stock Exchange on February 10. The stock has generated returns of 69 percent during the past one year and is trading up by 7 percent in the past one month.
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