Oil and Natural Gas Corporation’s (ONGC) Q1FY21 standalone and consolidated EPS was down 92-98% YoY, hit by fall in oil & gas realisation, sales volumes and other income. What is encouraging is ONGC remained in the black despite low oil & gas prices, which was due to 40% (US$11.3/boe) YoY decline in opex. We believe oil is out of the woods and will gradually rise. .
OutlookRecent indications from GoI, that it is unlikely to divest its stake in PSUs like ONGC, are encouraging as divestment via ETFs has hurt ONGC’s stock performance. Gas price reforms or deregulation could be a trigger. We reiterate BUY on ONGC.
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