MOSL: ONGC (Buy)-In-line EBITDA, no subsidy burden yet
ONGC: In-line EBITDA, no subsidy burden yet
(ONGC IN, Mkt Cap USD31.0b, CMP INR166, TP INR219, 32% Upside, Buy)
- ONGC’s reported EBITDA of INR147b (+49% YoY, +29% QoQ) was in line with our estimate. DD&A of INR50.3b was below our estimate of INR70b due to lower write-offs. PAT came in at INR61.4b (+58% YoY, +4% QoQ), marginally below our estimate of INR63b due to (a) lower other income of INR6.5b (est. of INR22b; -24% YoY, -83% QoQ), led by lower dividend income and lower cash balance and (b) a higher tax rate of 36% (v/s 28.2% in 4QFY18 and 34.6% in 1QFY18), as loan taken for HPCL acquisition does not qualify for tax shield.
- 1Q net realization stood at USD74.2/bbl (inclusive of VAT/CST) (est. of USD71.4/bbl; +45% YoY, +11% QoQ). ONGC’s realization premium to Brent in 1QFY19 stood at USD2/bbl v/s historical trend of USD1/bbl. Subsidy sharing was nil, and we model the same for FY19/20.
- Gas production, sales up YoY: 1QFY19 oil sales stood at 5.8mmt (-3.5% YoY and +1.7% QoQ) and gas sales at 4.9bcm (+2.9% YoY, +2.2% QoQ). Oil production stood at 6.22mmt (-3.5% YoY, +0.2%QoQ) and gas production at 6.19bcm (+3.2% YoY, +1.9% QoQ). Gas production is expected to grow, led by completion of its development projects. We expect gas production to increase ~10% annually, going ahead.
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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