ONGC slips up to 4% after reporting a first-ever loss in March quarter

Shares of Oil and Purely natural Fuel Corporation (ONGC) slipped as considerably as 3.93 for every cent to Rs 78.twenty apiece on the BSE on Wednesday, a working day soon after the state-operate oil and gasoline firm posted a pre-tax loss of Rs 10,529 crore in the fourth quarter of the economic year 2019-twenty (Q4FY20). The loss was because of to a drop in crude oil costs, the influence of the Covid-19-induced lockdown, and trade losses. It was ONGC’s to start with-ever quarterly loss.

At 09:29 am, the inventory was investing 1.six for every cent decreased at Rs 80.10 on the BSE. In comparison, the S&P BSE Sensex was quoting .5 for every cent bigger at 35,099 stages.

ONGC had logged a revenue just before tax (PBT) of Rs eleven,691 crore in the corresponding period of FY19. The company’s earnings from operations declined by 7 for every cent to Rs 104,489 crore in the period under evaluate, when compared to Rs 112,539 crore the former year. Click Listed here TO Examine Entire REPORT

Through the quarter under evaluate, the company’s web realisation on crude was noticed $49.01 a barrel, as from $sixty one.93 a barrel a year in the past. Fuel rate for the quarter was also decreased at $3.23 for every million metric British thermal unit (mmBtu), when compared to $3.36 a mmBtu in the year-in the past period.

Analysts at Motilal Oswal Economic Products and services (MOFSL), in an earnings evaluate report, notice that worldwide lockdowns on account of Covid-19 led to big desire destruction, which saw crude oil costs sink to historic lows. With the lifting of the lockdowns throughout the planet, desire is yet again seeing an uptick. On the offer facet, manufacturing cuts, both equally intentional (OPEC++) and accidental (because of to lousy economies/bankruptcies) seem to be putting upward tension on oil costs, they wrote.

“ONGC is expected to expand its gasoline manufacturing by virtually twelve for every cent / 26 for every cent to 27.9bcm/35.2bcm in FY21/FY22E. When no oil manufacturing growth is expected, ONGC’s attempts to arrest drop from age-previous fields (accounting for 60–70 for every cent of the overall oil manufacturing) is commendable,” the brokerage explained. It has preserved a “Get” ranking on the inventory with the concentrate on rate of Rs one hundred and five.

“With oil out of the woods, we revert to discounted funds circulation DCF-centered honest worth of ONGC’s oil & gasoline reserves from 10x FY21E earnings for every share (EPS) before. Our DCF-centered valuation, assuming Brent at US$forty/bbl in FY21E, US$45/bbl in FY22E

and long-phrase Brent at US$50/bbl, is effective out to Rs124/share (52% upside),” suggests ICICI Securities.

It additional suggests that under the prevailing gasoline pricing formula (joined to gasoline costs in 4 countries of which three are web exporters), gasoline costs would be virtually US$2.2/mmbtu in FY21E. Deregulation of gasoline costs could boost trader sentiment in ONGC and strengthen its gasoline costs gradually to US$4/mmbtu or bigger. The the latest start off of the gasoline investing trade and the oil minister’s comments at the start of the trade is also expected to support the firm.

Other than, a rise in oil costs would also be a share rate driver, it suggests in its ranking rationale. The brokerage has upgraded the inventory to ‘Buy’ from ‘Hold’ with the concentrate on rate of Rs 124.