Motilal Oswal's research report on ONGC
ONGC’s reported EBITDA stood at INR163.4b (-12% YoY, -20% QoQ), 22% below our estimate, due to higher other expenses in 4QFY23. Net loss came in at INR2.5b (v/s our PAT est. of INR109.3b) led by exceptional items of INR92.4b for provisions-related ongoing dispute regarding the applicability of service tax and GST on Royalty. Management expects oil production from KG-DWN-98/2 to commence by Aug’23 in an optimistic scenario and by Oct’23 in a worst case scenario. The peak oil production is likely to be ~40-45kbopd as per earlier guidance.
Outlook
We value the standalone business at 6x FY25E adj. EPS of INR30.4 and add the value of investments of INR33 to arrive at our TP of INR215, implying 35% potential upside. We reiterate our BUY rating on the stock.
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