ONGC stock trades flat despite 142% spike in Q2 consolidated net profit

Shares of Oil and Natural Gas Corporation of India (ONGC) dropped 0.23 percent in early trade on November 13 after the company posted a 142 percent on-year surge in consolidated net profit. At 9:26am, the ONGC stock was trading at Rs 195.40 on the NSE.

Oil and Natural Gas Corporation Limited (ONGC) on November 10 reported a 142.4 percent spurt in consolidated net profit at Rs 16,553 crore for the second quarter of the financial year 2023-24 from Rs 6,830 crore last year.

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Revenue from operations, however, fell 12.9 percent to Rs 1.46 lakh crore in the quarter ending September 30, from Rs 1.68 lakh crore last year, ONGC said in an exchange filing. The board at the state-run oil producer approved an interim dividend of Rs 5.75 per share. The record date for distribution of dividend has been fixed for November 21.

Brokerage views, target price

CLSA recommended a ‘buy’ call on ONGC with a target price of Rs 225 per share. The company’s earnings surpass estimates due to improved realisations and reduced costs. Despite declining production, upcoming projects may offset the impact.

“Resumption of operations in Mozambique and the start of production in Eastern Block KG-98/2 are potential triggers. The stock reflects a crude price realisation of $63/bbl, with the government aiming for stability post-windfall tax, targeting a crude price realisation of $75/bbl,” the report said.

Stock performance

The ONGC stock has given a return of 18.78 percent over the last six months. The benchmark Nifty50 index has given a return of 6.12 percent over the last six months.

Also Read: ONGC Q2 Results: Consolidated net profit soars 142% YoY to Rs 16,553 crore

During the second quarter, ONGC’s total crude production dropped 2.1 percent to 5.249 million metric tonnes (MMT) from 5.360 MMT a year back. Its natural gas production declined by 2.8 percent to 5.2 billion cubic metres (BCM) in the second quarter, as against 5.35 BCM last year.

The company argued said that reduction in production output can primarily be attributed to a decline in some of the matured fields and marginal fields. To counter this decline, ONGC said it is taking proactive steps by implementing well interventions and advancing new well drilling activities within these fields.

In India, the company’s offshore E&P segment reported EBIT came in at Rs 10,380.15 crore, while onshore EBIT was Rs 2,215.58 crore. For the refining and marketing segment, ONGC’s EBIT was Rs 8,880.37 crore in Q2, compared to loss of Rs 4.748.44 crore last year.

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