ONGC Q4 Results Review - KG On Track To Help Reverse Decade-Long Production Decline: ICICI Securities

ICICI Securities Report

Oil and Natural Gas Corporation Ltd. reported adjusted Ebitda/profit after tax (standalone) for Q4 FY24 of Rs 166.9 billion (-4% YoY)/Rs 98.7 billion (+12% YoY) versus our estimate of Rs 188.5/Rs 98.1 billion.

Sharply higher other opex and flat production drove the YoY Ebitda dip, with higher other income and lower taxes. FY24 standalone Ebitda/PAT came in at Rs 668 billion (-13% YoY)/Rs 405 billion (+4% YoY).

Consolidated Ebitda/PAT of Rs 1.03 trillion/Rs 504.5 billion in FY24 has been very strong, driven by a sharp recovery in subsidiaries HPCL/MRPL’s earnings, even as OVL’s earnings remained subdued.

Going forward, the commencement of the large KG basin asset remains the key performance driver over FY25-26E – will likely fuel a material jump in production.

We also expect conspicuous recovery in HPCL/MRPL’s earnings prospects coupled with reducing leverage in ONGC’s consolidated balance sheet. Reiterate Buy.

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