Oil & Natural Gas
Corporation Limited
NSE Symbol ONGC
OIL & NATURAL GAS COMMISSION has produced below Par results for the third quarter
ending Dec,2011. Now, Government is planning to OFFER FOR SALE a part of its
equity to the public. In the circumstances, it is pertinent to examine its
current financials.
Net Sales
in Q3 FY 12 stood at Rs.18123.84 cr – down by (-)19.86% from Q2 FY 12 (previous
Qtr); but up by 11.88% from Q1 FY 12 (first Quarter); and down by (-)2.49 from
the corresponding Qtr of Q3 FY 11.
Other Oprtng Income
in Q3 FY 12 stood at Rs.393.29 cr – up by 27.26% from Q2 FY 12; up by 93.78% from Q1 FY 12; but down by (-)82.27%
from Q3 FY 11.
Employees Cost in Q3 FY 12 stood at Rs.337.05 cr – up by 2.89%
from Q2 FY 12; up by 8.8% from Q1 FY 12;
and up by 15.69% from Q3 FY 11.
Depreciation
in Q3 FY 12 stood at Rs.4531.96 cr – up by 38.25%
from Q2 FY 12; up by 9.93% from Q1 FY 12; and up by 24.47%
from Q3 FY 11.
Other Expenditure
in Q3 FY 12 stood at Rs.7005.48 Cr-down by (-)12.32% from Q2 FY 12; up by 7.06%
from Q1 FY 12; and up by 3.11% from Q3
FY 11.
Total Expenditure
in Q3 FY 12 stood at Rs.11998.21 cr – up by 2.24%
from Q2 FY 12; up by 8.54% from Q1 FY 12; and up by 9.94% from Q3 FY 11.
Profit from Operations in Q3 FY 12 stood at Rs.6518.92 Cr – down by (-)41.75%
from Q2 FY 12; up by 21.91% from Q1 FY 12; but down by (-)34.09% from Q3 FY 11
Other Income in Q3 FY 12 stood at Rs.958.17 Cr – down by
(-)15.43% from Q2 FY 12; up by 31.8% from Q1 FY 12; and up by 43.17% from Q3 FY
11
Exceptional Items Expense
in Q3 FY 12 stands at Rs(-)3142.08 Cr.
Profit before tax
stands at Rs.10617.31 cr – down by (-)13.8% from Q2 FY 12; up by 74.9% from Q1
FY 12; and up by 0.6% from Q3 FY 11.
Tax expense
stands at Rs.3875.90 cr in Q3 FY 12; up
by 5.48% from q2 FY 12; up by 96.19%
from Q1 FY 12; and up by 11.66% from Q3 FY 11.
Net Profit
stands at Rs.6741.41 cr in Q3 FY 12; down by (-)21.99% from q2 FY 12; up by 64.63%
from Q1 FY 12; and down by (-)4.83% from Q3 FY 11.
Face Value
of ONGC share is Rs.5 at present. It was
Rs.10 in Q3 FY 11.
Paid Up Equity stands at Rs.4277.76 cr
Basic EPS
stands at Rs.7.88 in Q3 FY 12; Rs.10.1 in Q2 FY 12; Rs.4.79 in q1 FY 12 – all on
FV of Rs.5. The EPS was Rs.33.12 on FV of Rs.10 in Q3 FY 11.
OTHER
HIGHLIGHTS
I. Under-recovery shoots up by 197%
bringing down PAT by 4.8%.
II. Notifies five more discoveries,
totaling 20 in the Fiscal Year.
III. ONGC Videsh Limited wins SCOPE
Excellence Award
IV. ONGC bags the Best overall
Performance PCRA Award for 3rd consecutive year
V. Sales Revenue for 9 m/e Dec,12 is
Rs.57,154 Cr against Rs.50,598 Cr in 9 m/e Dec,2010 and Rs.66,152 Cr in FY 2011
full.
VI. Net Profit for 9 m/e Dec,2011 is
Rs.19,479 Cr – against Rs.16,133 Cr in 9 m/e Dec,2010 (+21%); and Rs.18,924 Cr
in FY 2011 Full.
Under-recovery Discount
(Rs in Cr) is Rs.12,536 cr in q3 FY 12; Rs.4,222 Cr in Q3 FY 11 (197%+); The
same was Rs.30,296 cr in 9 m/e Dec,2011 and rs.12,757 cr in 9 m/e dec,2010; and
Rs.24,892 cr in FY 2011.
Gross realization (in US$ in bbl) was 111.73 in Q3 FY 12; 89.13 in Q3 FY 11; 116.24 in 9
m/e Dec,2011; 83 in 9 m/e dec,2010; and 89.41
in FY 11.
Realization in
Q3 FY 11 included Rs.1898 cr towards receipt from Gas Pool account. But, in
current year, only Rs.40 lakhs has been received and balance is yet to be
ascertained and received.
Production
Performance
Total Crude oil in MMT is 5.96 in Q3 FY 12; and 6.21 in Q3 FY 11. Fir
9m/e Dec,12, it is 20.34 while it is 20.48 for 9m/e Dec,11.mFor FY 11, the same
was 27.28.
Total Gas in BCM
was 6.40 in Q3 FY 12; 6.36 in Q3 FY 11;
18.95 in 9 m/e Dec,11; 19.02 in 9 m/e
Dec,10; and 25.32 in FY 11.
Total value added products
stand at 0.81 for q3 FY 12; 0.78 for Q3 FY 11; 2.33 for 9m/e dec,11; 2.3 for 9
m/3 dec,10; and 3.13 for FY 11.
Since, last Board meeting dt
4-01-2012, five more discoveries have been notified. One in KG shallow offshore
basin; another in western onshore basin; another in Mizoram Basin; another in Sourashtra
offshore western off shore basin;
another in western Tripura.
ANNOUNCEMENTS BY ONGC
28-02-2012 Government of India, Ministry of Petroleum & Natural Gas
has submitted to the Exchange Announcement with respect to Offer for sale
through Stock Exchange Mechanism for sale of 427,774,504 equity shares of Oil
& Natural Gas Corporation Limited by The President of India acting through
and represented by the Ministry of Petroleum and Natural Gas, Government of
India (Seller). Date and time of the opening of the sale : March 01, 2012 at
9:15 am and Date and time of the closing of the Sale : March 01, 2012 at 3:30
pm, Floor Price
: Rs. 290 per sale share.
08-02-2012 press release dated February 08, 2012 titled "ONGC
declares Q3 results. Under-recovery shoots up by 197% bringing down PAT by
4.8%".
04-01-2012 press release dated January 04, 2012, titled " I. ONGC
Notifies Four more discoveries totaling 15 in the Fiscal Year; II. ONGC Declares
125 % Interim Dividend ".
02-12-2011 Press Release dated December 02, 2011 titled "ONGC
Board flagged off Development of B-127 cluster".
02-12-2011 Press Release dated December 01, 2011 titled "ONGC notifies
two impressive discoveries"
07-11-2011 press release with respect to the following: (1) ONGC
improves Q2 Net by 60.4% (2) Notifies one more discovery in Oct'11 totaling 9
in the year.
28-09-2011 "ONGC Board decides to issue NOC to Cairn India Ltd for
their proposed Transaction of shares with Vedanta Resources PLc".
OFFER FOR SALE OF ONGC SHARES
BY GOVT OF INDIA
The annual EPS of ONGC for FY 12 is likely to be
around Rs.31.
Current Market Price is Rs.293.20; while the 52 week high price is Rs.325.65 and the
52 week low price is Rs.241.75.
At
this price and EPS, it is commanding a PE Ratio of 9.46.
The
PE ratio is certainly not high – considering that ONGC is in a niche area and
has huge scope for oil and gas exploration. Since it is in oil and Gas exploration – both of
which are subject to Government controls – some uncertainty regarding pricing
and recovery is bound to be there – till India becomes self – sufficient.
This
is a long way ahead, given the tardy rate of exploitation of the oil and Gas
wells already discovered. Government will need to encourage the exploration and
exploitation of oil and Gas reserves in on shore and the especially off-shore basins.
With
India having a sea coast of over 5000 KMs, the prospects from each discovery can be high. If
China could start exploration even in Indian Ocean – as some News reports
indicated periodically – why not India too get into similar efforts – even away
from its shores, within the international laws?
While such larger
questions need detailed examination – the future of ONGC is clearly secure and bright – as it starts
exploiting the oil and Gas reserves it has already discovered.
For this, it will
need to forge Joint ventures with the likes of BP (as Reliance has done) so
that exploiting the reserves discovered can start FAST. Government may need to
nudge ONGC to forge such alliances and joint ventures fast.
Public
holding in the company currently stands at 25.86%
or 2,212,527,428 no. of shares of Rs.5 FV each. To this, 427,774,504
shares will now get added presumably, from Govt pool.
As we can see from the announcements
section, Govt of India is offering for Sale 427,774,504 shares (FV Rs.5) – at a
floor price of Rs.290 Rupees - from March,1st.
Currently, ONGC shares are hovering
around the floor price only. At this price, the downward risk seems to be very
limited. Medium to long term investors will certainly gain from the purchase.
But, what can happen in the short term? This depends on Budget and RBI monetary Policy both.
If
RBI reduces CRR / SLR significantly to boost liquidity and also reduces
the HIGH INTEREST RATE REGIME, it will definitely boost Growth in many
sectors - and boost market sentiment immediately for this reason. This benefits entire market - including ONGC. There
is no rationale now - to continue the anti-growth regime of High Interest
rates.
Second,
Government can (and must) turn Budget into an instrument of Growth.
Social service / Subsidy sectors (like NREGS) must be controlled more drastically and
made productive and economical.
Revenues have always matched and
overshot expectations of Government - when it went for Growth-oriented
Policies. Therefore Budget deficit in 2012-13 can be brought down
comfortably, if Budget is made an Engine of Growth. revenue expectations from 2012-13 need not depend on the depressed environment of 2011-12.
The
anti-Growth Policies of 2011-12 , including that of Govt and RBI, have stifled
growth, for the ostensible cause of containing Inflation - and in the process, added considerably to Budget deficit for current year - which itself is inflationary in character.
Now,
both Govt and RBI are more concerned about Growth. 2012-13 can be an
engine for Growth. If this happens, the short term prospects of ONGC
share price also will improve considerably.
RESULTS TABLE
|
ONGC
|
31-Dec-11
|
30-Sep-11
|
%DIF1
|
30-Jun-11
|
%DIF2
|
31-Dec-10
|
%DIF3
|
|
Net Sales
|
1812384
|
2261632
|
-19.86
|
1619896
|
11.88
|
1858641
|
-2.49
|
|
Other Oprtng Income
|
39329
|
30904
|
27.26
|
20296
|
93.78
|
221774
|
-82.27
|
|
Increase in SIT/WIP
|
-2910
|
-2609
|
11.54
|
-7051
|
-58.73
|
4286
|
-167.9
|
|
Raw Materials
|
15219
|
16486
|
-7.69
|
14879
|
2.29
|
14111
|
7.85
|
|
Traded Goods
|
63
|
45
|
40
|
64
|
-1.56
|
323
|
-80.5
|
|
Employees Cost
|
33705
|
32758
|
2.89
|
30979
|
8.8
|
29134
|
15.69
|
|
Depreciation
|
453196
|
327817
|
38.25
|
412247
|
9.93
|
364098
|
24.47
|
|
Other Expenditure
|
700548
|
798993
|
-12.32
|
654326
|
7.06
|
679404
|
3.11
|
|
Total Expenditure
|
1199821
|
1173490
|
2.24
|
1105444
|
8.54
|
1091356
|
9.94
|
|
Profit from Operations
|
651892
|
1119046
|
-41.75
|
534748
|
21.91
|
989059
|
-34.09
|
|
Other Income
|
95817
|
113297
|
-15.43
|
72697
|
31.8
|
66926
|
43.17
|
|
Interest
|
186
|
653
|
-71.52
|
401
|
-53.62
|
544
|
-65.81
|
|
Exceptional Items
|
-314208
|
-
|
-
|
-
|
|||
|
Profit before tax
|
1061731
|
1231690
|
-13.8
|
607044
|
74.9
|
1055441
|
0.6
|
|
Tax expense
|
387590
|
367467
|
5.48
|
197554
|
96.19
|
347118
|
11.66
|
|
Net Profit
|
674141
|
864223
|
-21.99
|
409490
|
64.63
|
708323
|
-4.83
|
|
Face Value (In Rs
|
5
|
5
|
0
|
5
|
0
|
10
|
|
|
Paid Up Equity
|
427776
|
427776
|
0
|
427776
|
0
|
213889
|
100
|
|
Basic EPS
|
7.88
|
10.1
|
4.79
|
33.12
|
|||
|
Public holding (%)
|
25.86
|
25.86
|
0
|
25.86
|
0
|
25.86
|
0
|
*
* * E
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