ONGC|Q2FY15 Result Update | Above our expectation | CMP : Rs.393 | Rating : BUY | Target : Rs.462 :: IndiaNivesh

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ONGC reported Q2FY15 numbers above our expectation due to higher EBITDA
and lower effective tax rate. Net sales decreased by 8.7% YoY and 6.4% QoQ to Rs
203.61 bn (our expectation was Rs 200.4 bn) due to lower realization coupled
with lower production. Gross realization stood at USD 102.13/bbl v/s USD 109.48
in Q1FY15 where as Net realization stood at USD 41.35/bbl v/s USD 47.15/bbl in
Q1FY15. Net realization in Rupee terms decreased 10.07% YoY to Rs. 2505 per
barrel. ONGC shared subsidy burden of Rs. 136.4 bn vs Rs. 132 bn in Q1FY15.
EBITDA margin contracted 61 bps YoY to 44.2% as benefit of lower other
expenditure was offset by higher employee cost and statutory levies. Reported
net profit decreased by 10.2% y-o-y (up 13.9% QoQ) to Rs. 54.45 bn, above our
expectation of Rs 43.99 bn due to higher EBITDA and lower effective tax rate.
Above our expectation
Rs.mn Q2FY15 Q1FY15 Q2FY14 Q‐o‐Q % Y‐o‐Y % INSPL Q2FY15e Variance(%)
Revenue 204478 218513 224147 ‐6 ‐9 200400 2.03
EBIDTA 90286 88643 100329 2 ‐10 84325 7.07
PAT 54447 47817 30254 14 80 43997 23.75
Adjusted PAT 54447 47817 30254 14 80 43997 23.75
Source: Company Filings; IndiaNivesh Research
On operational front, crude oil production from nominated field grew by 2.10% YoY
and 1.86% QoQ to 5.21 MMT while natural gas production fell 5.77% QoQ and
8.87% YoY to 5.676 BCM. ONGC notifies two more hydrocarbon discoveries; one
new Prospect (GKS092NAA-1 (NELP block GK-OSN-2009/2) at Kutch Offshore shallow
water) and one New Pool discovery at well RSAK (R-184) in Rudrasagar ML Block,
North Assam Shelf, A&AA Basin. With this, ONGC notified total 10 discoveries (5
new Prospects and 5 new Pools) so far in FY15. The government has approved 5%
stake sale of ONGC which will come in market soon.

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http://www.indianivesh.in/Admin/Upload/635518125295175000_ONGC_Q2FY15%20Result%20Update.pdf