ONGC Limited, commonly known as Oil and Natural Gas Corporation Limited, is a crude oil and natural gas company in India. The company is a public-sector enterprise, owned by the Government of India and falls under the administrative purview of Ministry of Petroleum and Natural Gas. The company has been conferred with the Maharatna status and is among the largest publicly-traded company. Furthermore, ONGC Limited is also the largest upstream company in India, contributing approximately 70% of India’s crude oil and roughly 60% of its natural gas.
Core Business Operations
ONGC Limited is currently engaged in three primary operational segments – the exploration of oil and gas reserves, development of wells and work rigs, and production of crude oil and natural gas.
The company’s exploratory efforts form an important part of its business. It is tasked with the responsibility of carrying out oil exploration in India. Broadly speaking, the company focuses on three regions – deep water, shallow water, and onshore. As of March 31, 2018, the company had discovered 12 hydrocarbon beds of which, six are onshore and six are offshore.
In the development segment, ONGC Limited is mainly responsible for providing drilling services and constructing oil rigs and wells. In fact, this segment alone accounts for more than 55% of the company’s total capital expenditure. For the financial year 2018, the company drilled 503 wells – the highest ever in its history. Of this, 119 wells are exploratory. It is also worth mentioning that for the year, the company reduced its drilling cost by 7% for offshore wells.
Coming to the production part of operations, ONGC is considered to be the largest crude oil producer in India. This is owing to its strong foothold in the other two segments which, in turn, has enabled it to capitalize on the country’s demand for crude oil. The company’s crude oil production for the year stood at 35 MMT (Million Metric Tonnes) while its gas production was reported to be at 29 BCM (Billion Cubic Metres). These figures were reported on a consolidated basis.
In addition to its domestic operations, ONGC Limited has also got a discernible global footprint through its subsidiary – ONGC Videsh. ONGC Videsh is an international oil and gas company that is presently engaged in 41 projects in 20 countries, namely Russia, Azerbaijan, Israel, Iran, Syria, Vietnam, Brazil, and many more. Its portfolio comprises 15 producing, 18 exploratory and 4 pipeline projects.
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ONGC Limited Financial Performance
For the year ended on March 31, 2018, ONGC Limited reported its revenue from operations to be at Rs.85,004 crore, in comparison to Rs.77,907 crore reported for the previous fiscal year. On a y-o-y basis, this marked an increase of a little over 10% in the revenues. As for the total expenditure for the period, it increased marginally by a little over Rs.3,000 crore y-o-y to Rs.28,892 crore.
The company reported a healthy profit for the year FY 2017-18. Its profit before tax was stated to be at Rs.28,892 crore, as against Rs.25,212 crore reported for the same period, last year. Similarly, its profit after tax was disclosed to be Rs.19,945.2 crore – an increase of a little over 10% over the same period last year.
Consequently, the basic earnings per share (EPS) of the company grew y-o-y from Rs.13.95 to Rs.15.54.
Similarly, for the Q1 FY 2018-19, the company’s revenue from operations increased by a little over 50% y-o-y to Rs.27,212.8 crore. Considering the net profit for the June quarter of the FY 2019, ONGC Limited reported its profit to be at Rs.6,143.8 crore, as against Rs.3,888.7 crore stated for the same quarter of the previous year.
Considering the statement of assets and liabilities for the year ended on March 31, 2018, the company’s total assets were reported to be worth Rs.2,91,228 crore, as against Rs.2,47,249 crore reported for the previous fiscal year. Its non-current liabilities increased from Rs.42,477 crore to Rs.48,481 crore, y-o-y.
Needless to mention, the company is financially strong and fundamentally sound. It has performed exceptionally well in all operational aspects and the same has been reflected in its financials as well.
ONGC Limited Stock Trends
On January 2, 2018, the opening stock price of ONGC Limited was Rs.195.75 on the NSE. Over the course of the month, the shares gained a little over 8% to reach its 52-week high at Rs.212.85. However, this gradual rise in the shares was followed by a bull run over the course of the next few months. The shares descended back into the Rs.180 region in February and stayed at those levels until May. In June, the scrip lost another 17% to touch the Rs.150 mark. Eventually, the ONGC shares hit their 52-week low at Rs.151.80 on the NSE.
However, in July, the shares moved on to rise gradually and soon, they reached their previous levels at Rs.180. As of September 20, the ONGC stock price was varying at levels close to Rs.180.
Dividend-wise, the company has always been rewarding. In September, the company announced a final dividend of 27%. This was followed by two interim dividends over the course of the financial year, amounting to a total of 105%.
A similar trend was seen in 2017 as well, with the shares starting the year at Rs.190, descending down to the Rs.150 mark in June and July, and eventually rising up to end the year at Rs.195.20.BankBazaar.com has given detailed study for the latest ONGC stock trends.
In January 2018, ONGC Limited acquired a 51.11% stake in Hindustan Petroleum Corporation. This acquisition further solidified the position of the company in the oil industry. It also helped the company consolidate its position in the downstream operations (refining and marketing, to be more precise). However, the company is planning to borrow Rs.25,000 crore to fund its buy which is likely to add to its liabilities.
Secondly, the rise in the crude oil prices coupled with a falling rupee also serves as a positive outlook for the company. Furthermore, with sanctions on Iran coming into effect in November, ONGC Limited will have an important role to play to cater to India’s oil demand. For patient, long-term investors, this particular scrip makes for an attractive buy. However, before investing in this scrip, it is recommended that you consult a financial advisor.