Emkay's research report on Oil and Natural Gas Corporation (ONGC)
Results came in line with our estimates with EBIDTA came at Rs90bn (our estimate of Rs89bn) and PAT came of Rs53bn. (our estimates of Rs53bn)
Started prod. from various marginal fields like B193, B22, WO/6, Cluster 7 and Daman D1, C series with the total oil prod. of 29,331bpd and gas production of 4.42mmscmd
Net realization at $41.4/bbl vs $47.1/44.3/bbl qoq/yoy. Gross subsidy of Rs224bn, upstream share stood at 73% to Rs163bn, and within upstream ONGC share at 83% to Rs.136bn
Clarity in gas pricing and expected resolution of the subsidy issue would be a material positive for upstream companies. At CMP, the stock trades at 11.2x FY16EPS and 1.9x P/bv. Maintain Buy, with a TP of Rs460
Outlook and Valuation"We remain positive on ONGC on the back of fuel pricing reforms undertaken by the government. Clarity in gas pricing and expected resolution of the subsidy issue would be a material positive for upstream companies. We believe clarity in subsidy sharing will be the key for success in ONGC divestment which is expected soon. Moreover, ONGC also offers an attractive dividend yield of around 2.5%. At CMP, the stock trades at 11.2x FY16EPS and 1.9x P/bv. Maintain Buy, with a target price of Rs 460", says Emkay Global Financial Services research.
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