ONGC up 3%, hits 4-month high post Q2 nos; board okays 35% interim dividend

Shares of Oil and Natural Gas Corporation (ONGC) hit an over four-month high at Rs 143.20, on gaining 3 per cent in Tuesday’s intra-day trade in an otherwise range-bound market after the oil explorer reported a standalone net profit of Rs 12,826 crore in September quarter (Q2FY23). The state-owned oil exploration & production company had posted profit of Rs 18,348 crore in a year ago quarter.

ONGC reported revenue at Rs 38,321 crore during the quarter. Gross oil realization stood at $95.5/bbl. Net of windfall tax, realization stood at $72.2/bbl. Gas realisation remained unchanged sequentially at $6.1/mmbtu (on GCV basis). EBITDA during the quarter decreased 27.5 per cent QoQ to Rs 18,812 crore.

However, net of windfall tax of Rs 6,450 crore, revenue came in at Rs 31,900 crore, in line with our estimates, the brokerage firm Motilal Oswal Financial Services said.

The movement in oil prices is important for ONGC’s performance, going ahead. Currently, Brent oil prices are trending near $94/bbl. Domestic gas prices were revised upwards in semi-annual price revision in October. Current trend in global oil & gas prices augurs well for ONGC, according to ICICI Securities.

However, during the current quarter, the government has imposed windfall taxes on domestic oil production. Windfall taxes are being reviewed every fortnight. This will reduce the overall realisation of the company. Additionally, low volume growth on a sustainable basis remains a key concern for the company and needs to be addressed in order to create value for shareholders, the brokerage firm said in a note.

Meanwhile, ONGC said the board approved interim dividend of 135 per cent, i.e. Rs 6.75 on each equity share of Rs 5. The company has fixed November 22, 2022 as the record date for distribution of dividend.

At 09:27 am; ONGC traded 2 per cent higher at Rs 142.50, as compared to 0.21 per cent decline in the S&P BSE Sensex. In past one month, the stock has outperformed the market by surging 12 per cent, as against 6.4 per cent rise in the benchmark index. ONGC was trading at its highest level since July 1, 2022.