ONGC share price dips 4% on poor Q4 show; CLSA reiterates sell

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Oil and Natural Gas Corporation (ONGC) share price declined 4 percent in the early trade on July 1 after the company posted a poor set of numbers in the quarter ended March 2020.

The state-owned company on June 30 posted a net loss of Rs 3,098 crore for the quarter ended March 31, impacted by an impairment on the slump in oil and gas prices. The company had reported a profit of Rs 4,239.50 crore in Q4 FY19 and Rs 4,226.45 crore in Q3 FY20.

Revenue from operations during the quarter declined 19.8 percent year-on-year to Rs 21,456.2 crore, while the quarter-on-quarter fall was 9.5 percent.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 71.7 percent sequentially to Rs 2,512 crore and margin fell 2,570 bps QoQ to 11.7 percent in Q4FY20.

Also Read - ONGC reports first-ever quarterly loss of Rs 3,098 crore on impairment loss, revenue dips 20%

CLSA has reiterated sell call on the stock with a target at Rs 55 per share.

According to CLSA, it is a big Q4 miss with EBIT was 34 percent below the estimate. However, the impairment & large forex losses was partially offset by a tax write-back.

The company is among the more expensive global E&Ps. The fall in domestic gas price & more equity supply by the government are overhangs.

The pressure on profit has taken away dividend yield support, reported CNBC-TV18.

According to Motilal Oswal, although gas production has been delayed, broking house expects it to jump significantly over the next 2-3 years. This would be led by the 13 projects that the company is working on. Oil production is expected to remain flat.

The stock is trading at 3.3x FY22E EV/EBITDA and 4.3x FY22E P/E. Motilal Oswal value the company at 10x FY22E adjusted EPS of Rs 7.8 and add value of investments to arrive at a target price of Rs 105 and reiterated buy.

At 09:19, hrs Oil and Natural Gas Corporation was quoting at Rs 79.65, down Rs 1.75, or 2.15 percent on the BSE.