MOSL: ONGC (Buy)-EBITDA below estimates-no subsidy burden
ONGC: EBITDA below estimates; no subsidy burden
(ONGC IN, Mkt Cap USD27.2b, CMP INR155, TP INR208, 34% Upside, Buy)
- ONGC reported net operating income of INR280b (est. 301b, +48% YoY, +17% QoQ), lower than our estimate due to higher-than-expected discount of 2.4% to Brent for oil price realization and lower oil sales. EBITDA came in at INR158b (est. 168b, +51% YoY, +39% QoQ). Depreciation including write-offs stood at INR48.5b (est. 63.6b, flat YoY, -23% QoQ), lower than our estimate due to lower write-offs. Other income stood at INR23.9b (est. 8b, +24% YoY, -36% QoQ). Despite lower-than-expected EBITDA, PAT stood at INR82.6b (est. 70.2b, +61% YoY, +40% QoQ), higher than our estimate due to much lower depreciation and higher other income.
- Oil realization: Crude oil realization stood at USD73.1/bbl v/s USD51.2/bbl in 2QFY18 and at USD74.2/bbl in 1QFY19. There was no subsidy burden in the quarter.
- Sales volumes: Oil sold stood at 5.4mmt (-8% YoY, -9% QoQ). Gas sold stood at 5.0bcm (+2% YoY, +5% QoQ). Total VAP sold stood at 914tmt (flat YoY, +11% QoQ).
- Lower DDA at USD7.6/boe: Write-offs in the quarter stood at INR13.2b v/s INR13.3b in 2QFY18 and INR11.4b in 1QFY19. DDA stood at USD7.6/boe v/s USD8.1/boe in 2QFY18 and USD8.2/boe in 1QFY19.
Oil and Natural Gas is engaged in exploration, development and production of crude oil and natural gas. Co.'s business also includes niche areas like -processing of crude oil & natural gas; oil field services, transportation of the oil and natural gas, production of value added products like - LPG, Naphtha, Superior Kerosine Oil, ATF, C2-C3, etc., Refinery, Petrochemicals, Power, unconventional and alternate sources of energy. Co.'s five international locations as per oil & gas production are in Vietnam, Russia, Venezuela, Sudan, South Sudan, and Colombia. Co.'s five international locations as per oil & gas reserves are in Russia, Venezuela, Sudan, South Sudan, Myanmar and Vietnam.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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