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Q2FY12 Results above expectations ONGC’s Q2FY12 net profit of Rs86.4bn was significantly higher than our estimate of Rs70.4bn mainly on account of a) lower than estimated subsidy burden of Rs57bn b) lower DDA expense and c) higher other income. Net realization for the quarter stood at an all time high of $83.7/bbl (yoy +33.4%, qoq +71.7%) on account of lower subsidy burden during the quarter which was a result of price hikes and duty cuts announced in June. Production volumes of oil (excl JV) declined by 1.8% while gas volumes increased marginally by 0.4% yoy. On a sequential basis, both oil and gas volumes increased by 1.8% and 3.9% respectively. Operating profit for the quarter stood at Rs141.6bn which was marginally higher than our estimate of Rs137bn while operating margin was 62.6%. We are revising upwards our crude oil price assumption for FY12e from $95/bbl to $105/bbl. Consequently, we are increasing our gross under recovery estimate for FY12e from Rs796.7bn to Rs1,118.6bn. Resultant we are lowering net realization estimate for FY12e from $61/bbl to $57/bbl. For FY12e and FY13e we maintain the share of Upstream companies at 38.7% of gross under recovery and ONGC’s share at 82.16%. We are reducing our earnings estimate for FY12e marginally 1.9%. We roll forward valuations to FY13e basis and maintain our BUY rating on the stock with a revised price target of Rs348. At the CMP, the stock is trading at 8.3x and 3.5x FY13e EPS and EBITDA respectively. Net revenue for the quarter increased by 24.3% yoy to Rs226bn – while on sequential basis the growth was higher at 39.6% mainly on account of lower subsidy burden during the quarter. Subsidy burden for the company more than halved to Rs57bn on account of price hikes and duty cuts announced in June. Further the share of Upstream companies of total gross under recovery was pegged at 33%. This led to ONGC earning its highest net realization of $83.7/bbl. Oil (excl JV) and gas sales volumes during the quarter witnessed a decline of 4.9% and 1.8% respectively while on a sequential basis, both increased by 1.1% and 3.8% respectively. Operating profit increased by 27.7% yoy to Rs141.6bn – while on a sequential basis the increase was higher at 52.8%. ONGC’s Q2FY12 operating profit was marginally higher than our estimate of Rs137bn while operating profit margin for the quarter stood at 62.6% (yoy +168bps qoq +540bps). DDA for the quarter stood at Rs32.8bn (yoy -25%, qoq -20%) which was lower than our estimate on account of lower Dry well expense. Other Income was higher than our estimate on account of dividend income and higher yield during the quarter. Consequently, ONGC’s net profit at Rs86.4bn was significantly higher than our estimate of Rs70.4bn.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q2FY12 Results above expectations ONGC’s Q2FY12 net profit of Rs86.4bn was significantly higher than our estimate of Rs70.4bn mainly on account of a) lower than estimated subsidy burden of Rs57bn b) lower DDA expense and c) higher other income. Net realization for the quarter stood at an all time high of $83.7/bbl (yoy +33.4%, qoq +71.7%) on account of lower subsidy burden during the quarter which was a result of price hikes and duty cuts announced in June. Production volumes of oil (excl JV) declined by 1.8% while gas volumes increased marginally by 0.4% yoy. On a sequential basis, both oil and gas volumes increased by 1.8% and 3.9% respectively. Operating profit for the quarter stood at Rs141.6bn which was marginally higher than our estimate of Rs137bn while operating margin was 62.6%. We are revising upwards our crude oil price assumption for FY12e from $95/bbl to $105/bbl. Consequently, we are increasing our gross under recovery estimate for FY12e from Rs796.7bn to Rs1,118.6bn. Resultant we are lowering net realization estimate for FY12e from $61/bbl to $57/bbl. For FY12e and FY13e we maintain the share of Upstream companies at 38.7% of gross under recovery and ONGC’s share at 82.16%. We are reducing our earnings estimate for FY12e marginally 1.9%. We roll forward valuations to FY13e basis and maintain our BUY rating on the stock with a revised price target of Rs348. At the CMP, the stock is trading at 8.3x and 3.5x FY13e EPS and EBITDA respectively. Net revenue for the quarter increased by 24.3% yoy to Rs226bn – while on sequential basis the growth was higher at 39.6% mainly on account of lower subsidy burden during the quarter. Subsidy burden for the company more than halved to Rs57bn on account of price hikes and duty cuts announced in June. Further the share of Upstream companies of total gross under recovery was pegged at 33%. This led to ONGC earning its highest net realization of $83.7/bbl. Oil (excl JV) and gas sales volumes during the quarter witnessed a decline of 4.9% and 1.8% respectively while on a sequential basis, both increased by 1.1% and 3.8% respectively. Operating profit increased by 27.7% yoy to Rs141.6bn – while on a sequential basis the increase was higher at 52.8%. ONGC’s Q2FY12 operating profit was marginally higher than our estimate of Rs137bn while operating profit margin for the quarter stood at 62.6% (yoy +168bps qoq +540bps). DDA for the quarter stood at Rs32.8bn (yoy -25%, qoq -20%) which was lower than our estimate on account of lower Dry well expense. Other Income was higher than our estimate on account of dividend income and higher yield during the quarter. Consequently, ONGC’s net profit at Rs86.4bn was significantly higher than our estimate of Rs70.4bn.
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