ONGC Q4 Results Review - Volume Outlook Robust; Execution Will Be Key: Motilal Oswal

Motilal Oswal Report

Oil and Natural Gas Corporation Ltd.’s reported Ebitda stood at Rs 174 billion (+7% YoY) in Q4 FY24, 3% below our estimate, mainly due to higher-than-expected other expenses. The sharp rise in other expenses was due to one-off charges of Rs 9 billion for tax-related matters. Q4 profit after tax was 13% higher than our estimate, mainly aided by lower than-expected depreciation and dry well write-offs.

ONGC management expects total production (excluding joint venture) to rise to 47 mmtoe in the next three years from 39 mmtoe now, mainly driven by KG-98/2 and Daman upside development.

Gas production from the KG-98/2 asset, which will begin in Q3 FY25, is expected to ramp up to 10mmscmd by FY25 end, while oil production could ramp up to 45,000 barrel of oil per day by Q4 FY25.

FY24 capex stood at Rs 370 billion, attributed to one-off projects and the capitalization of some expenses. ONGC expects capex to normalize at Rs 330-350 billion in FY25.

We increase our total production assumptions for FY25/FY26 by 2%/3%. We value the standalone business at seven times FY26E adjusted earnings per share of Rs 34 and add the value of investments to arrive at our target price of Rs 340, implying 21% potential upside. We reiterate our Buy rating on the stock.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.