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    ONGC shares fall over 4% after Q4 profit declines 53%. What should investors do now?

    Synopsis

    ONGC's consolidated net profit fell 53% YoY to INR 5,701cr ($768m) for the March quarter, while revenue from operations increased 5% YoY to INR 1.64 lakh crore. On a standalone basis, ONGC reported a net loss of INR 248cr, compared to a profit of INR 8,860 crore in the same quarter last year. Brokerage firms have mixed views on the company: JM Financial has maintained its buy rating, while YES Securities suggests adding the shares, and ICICI Securities recommends buying with a target price of INR 164 ($2.21).

    ONGC shares fall over 4% after Q4 profit declines 53%. What should investors do now?iStock
    Shares of state-owned firm ONGC fell 4.3% to Rs 156.5 in Monday's intraday trade on BSE after the firm's consolidated net profit fell 53% to Rs 5,701 crore for the quarter ended March. The profit stood at Rs 12,061 crore in the March quarter of last year.

    Its revenue from operations during the reporting quarter rose 5% to Rs 1.64 lakh crore. It was Rs 1.55 lakh crore in the corresponding quarter of last year.

    On a standalone basis, the company reported a net loss of Rs 248 crore during the March quarter, compared with a profit of Rs 8,860 crore in the same quarter last year. Standalone gross revenues rose 5% to Rs 36,293 crore in the said period.

    The Board has recommended a final dividend of Rs 0.5 per equity share for the financial year 2022-23.

    At 11.09 am, the stock was trading 2.8% lower at Rs 159 on BSE. However, the stock has risen over 10% in the last one year.

    Should you buy, sell or hold ONGC's stock? Here's what analysts say:

    JM Financial
    Brokerage firm JM Financial maintained its buy rating on ONGC with a target price of Rs 200.

    "ONGC’s 4QFY23 standalone EBITDA was significantly lower at Rs 163 billion primarily due to a sharp jump in dry well writeoff at Rs 44.7 billion — dry well write-off tends to be volatile on a quarterly basis and, hence, gauging the sustainable trend is difficult, and net crude realisation at USD 71.8/bbl was also USD 3/bbl lower than JMFe," JM Financial said.

    YES Securities
    YES Securities has an add rating on ONGC with a target price of Rs 185.

    "ONGC’s 4QFY23 standalone operating profit at Rs 118 billion (-26% YoY; -37% QoQ), stood below our and street estimates on higher than estimated operating expenses. The crude oil and NG production stood weaker on natural decline in ageing fields and due to fewer days in the quarter," YES Securities said.

    "Going ahead FY24 production is expected to rise driven by ramp-up of production in KG-98/2. The peak production of 45000bpd of crude oil and 11mmscmd of NG from KG-98/2, though, is expected by FY25," it said.

    ICICI Securities
    ICICI Securities maintained its buy rating on ONGC with a target price of Rs 164.

    "Despite the miss in Q4FY23, full-year FY23 earnings were strong with standalone EBITDA / PAT up 44% / 19% YoY. Additionally, we note that, even at a realisation of US$75/bbl for oil and Rs 20-21/scm for gas, standalone and consolidated EPS for FY24E of Rs 40.5/sh and Rs 41.4/sh, respectively, are well above the average EPS for FY22/FY23," it said.

    "With full production from KG field to be available by FY25E, our FY25E EPS estimate of Rs 46.4 signifies stronger earnings prospects, even with capped realisations on oil and gas. We believe valuations at 3.5x FY24E consolidated EPS and 2.2x EV/EBITDA remain attractive," it added.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

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