ONGC share price declines over 1% post Q2 results. Should you buy, sell or hold the stock? Check brokerage views

Oil and Natural Gas Corporation (ONGC ltd) share prices declined up to 1.31% on the BSE in morning trades on Monday

Oil and Natural Gas Corporation (ONGC) released its July-September quarter results for fiscal 2023-24 (Q2FY24) on Friday, November 10, post market hours. ONGC reported a surge of 142 per cent in consolidated net profit at ₹16,553 crore, compared to ₹6830 crore in the corresponding period last year.

The state-run petroleum giant’s revenue from operations during the second quarter of the current fiscal stood at ₹146,873.73 crore, registering a decline of 13 per cent, compared to ₹168,656.12 crore in the year-ago period.

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ONGC’s 2QFY24 crude oil production stood at 4.545 mmt (million metric tonne), while including Joint ventures at 5.249 mmt, it was 2.1% lower. Gas production stood at 5.018 mmt while including JVs at 5.200 BCM was down 2.8% year-on-year

Analysts at Motilal Oswal Financial Services said that  ONGC’s 2QFY24 net crude oil sales were at 4.7mmt and gas sales stood at 4bcm came in line with their estimates.

Value added VAP sales at 651tmt were also in line with their estimates.

ONGC’s reported oil realization at $84.8 a barrel. Net windfall tax realization stood at $73 a barrel.

While windfall tax has meant that upside for the ONGC’s net realisations is limited, however analysts say that positive is that it will remain stable at close to $70 a barrel range.

Analysts at Prabhudas Liladher said that on the realization front, net oil realization post windfall tax is likely to be maintained at ~$70-75/bbl while gas prices have been capped at US$6.5/mmBtu. This provides comfort on the realization front.

Slightly lower Crude and gas sales volumes however meant that the earnings before interest tax depreciation and amortisation missed estimates of some analysts marginally.

Analysts at JM Financial Institutional Securities said that 2QFY24 standalone Ebitda was 6.7% below JMFL estimates at ₹184 billion (18,400 Crore) though only marginally below consensus of ₹186 billion due to slightly lower crude sales volume, marginally lower-than-expected oil & gas realization and higher cess.

ONGC Ebitda was 6% lower than Motilal Oswal Financial Services Estimates.

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However strong and consistent realisations and further a good Dividend yield keeps analysts positive on ONGC stock. Analysts at JMFL said that they maintain Buy on ONGC on strong dividend play and as ONGC’s current market price is discounting $55-60 a barrel of net crude realisation.

Analysts at Prabhudas Lilladher said that they maintain  ‘Buy’ rating with a Target price of ₹237, valuing the standalone business at 7 times FY26 adj Earnings per share of ₹28.2 and add the value of investments of ₹39.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Updated: 13 Nov 2023, 12:16 PM IST