Oil stock slips 3% after Q4 results; Analysts give a target with 37% upside

Shares of Oil & Natural Gas Corporation Limited (ONGC (NS: ONGC )) closed at Rs 159, slipping around 3 percent as compared to the previous closing price of Rs 163.75.

Such a fall in the stock prices today is observed after the company, through a regulatory filing with the BSE, announced its Q4 as well as Annual results for FY2022-23. The facts and figures are been discussed later on in the piece.

In addition to the same, the company’s Board also recommended a Final Dividend of Rs 0.50 per equity share ( 10 percent of its Face Value of Rs 5 ). Payment of the same is subject to shareholder approval.

ONGC is a company that is primarily engaged in the process of exploration, production, and development of oil & natural gas . The company operates onshore as well as offshore fields globally through joint ventures and partnerships. Apart from the above, it also engages in the refining and transportation of hydrocarbon products.

A quick walkthrough of the numbers reported by the company enables us to observe that the operating revenues, as well as Profit After Tax (PAT) numbers, have underperformed and reduced sequentially with the former going down from Rs 1,69,213 crores in Q3 to Rs 1,64,067 crores in Q4 and the latter, keeping the timeframe the same, going down from Rs 11,665 crores to Rs 5,701 crores showing a decline of around 51 percent.

On a YoY basis, the operating revenues have shifted up from Rs 5,31,793 crores during FY21-22 to Rs 6,84,829 crores in FY22-23. On the contrary, the PAT figures have not been able to perform well thereby going down from Rs 49,294 crores to Rs 32,778 crores indicating a 34 percent decrease.

Coming onto the comparison of margin ratios on a sequential basis, both, operating as well as net profit margins took a shift down with the former reducing from 10.58 percent in Q3 to 9.40 percent in Q4 and the latter moving down from 6.89 percent to 3.48 percent.

Despite the underperforming numbers, ICICI Securities (NS: ICCI ) gave a ‘Buy’ tag to the company with a target price of Rs 218 indicating an upside of 37 percent as compared to the current price levels.

The rationale behind providing such a recommendation is contributed by strong Brent crude prices, expectations of gas prices to remain above average levels, and the company’s production levels to increase.

Written by Amit Madnani

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