MOSL: ONGC (Buy)-Further delay in KG-DWN-98/2; expect an upsurge in APM price
ONGC: Further delay in KG-DWN-98/2; expect an upsurge in APM price
(ONGC IN, Mkt Cap USD20.5b, CMP INR121, TP INR150, 24% Upside, Buy)
- ONGC reported in line crude oil sales (-4% YoY), while gas sales continue to be lower than our estimate (-6% YoY). Lower opex led to beat on EBITDA (8% higher than our estimate at INR101b).
- ONGC almost reached FY20 production levels for crude oil, while the decline in gas production is due to lesser offtake by customers due to the COVID-19 outbreak. This resulted in a production shortfall in VAP as well.
- Oil/gas production in FY21 was 22.5mmt/22.8bcm, totaling 45.3mmtoe. The company expects FY22 production at 48.7mmtoe, with oil/gas production at 22.5mmt/26.2bcm. Total production is expected to touch ~49mmtoe/52mmtoe by FY23/FY24.
- We build our oil production estimates in line with management’s guidance (at 22.6/24mmt for FY22/FY23), although our gas production estimate is conservative, given the continued delay in KG basin gas production.
- ONGC expects a further delay in production from the KG basin, with oil production guidance at 1.8mmt/2.2mmt in FY22/FY23 and gas production guidance at 2bcm/3bcm/4bcm in FY22/FY23/FY24 (v/s 1.2bcm in FY21).
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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